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British hospitality sector thrives as consumers increase spend on hotels and restaurants

3 min read

13 April 2015

Former deputy editor

The latest UK Expenditure Index from Visa Europe has revealed British consumers are increasingly spending their money on the hospitality sector, while the appetite for clothing and footwear continues to fall.

Hotels, restaurants and bars led the way for the five of eight expenditure categories that experienced growth in March, increasing transactions by 7.1 per cent year-on-year. 

The hospitality business was followed by increases of two per cent and 1.4 per cent in recreation & culture, and household goods retailers respectively, while miscellaneous goods and services rose marginally by 0.9 per cent, followed by food, beverages & tobacco with 0.2 per cent.

“We’ve seen a gradual improvement in consumer confidence in recent months, driving higher spending on household goods, recreation and eating out,” said Kevin Jenkins, UK & Ireland MD, Visa Europe. 

“A dry March, coupled with low inflation and real wage increases has continued that trend. People across Britain are increasingly dining out and going out, though spending remains prudent rather than excessive.”

According to the report, the Birmingham-based Glen Guest House has benefitted from business travellers. “We had an excellent month in March. Occupancy rate was 90 per cent, up from 75 per cent in March 2014,” said owner Pauline Cusack. “We serve mainly corporate guests on business trips to companies in the local area. These companies are doing very well and we are definitely benefiting from that.”

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Meanwhile, the clothing & footwear industry experience the largest sales decline with a 4.8 per cent fall, marking the fourth straight month consumer spending has decreased. Declines of 2.1 per cent and 1.5 per cent were also experienced in the health & education and transport & communication markets.

Jenkins added that clothing retailers should expect improved trade as improved weather, summer lines and May bank holidays are likely to help. Comparatively, overall consumer spending across all eight sectors increased by 1.1 per cent year-on-year.

Annabel Fiddes, economist at Markit, said: “Strong growth in total consumer spending adds to evidence that the UK economy is on track for an expansion of GDP of around 0.7 per cent in Q1 according to our estimates. Furthermore, a tightening labour market and weaker inflationary pressures have contributed to a renewed increase in real wages, suggesting that expenditure trends will remain positive as we head into Q2.”

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