Net spending in the leisure sector has improved in the second quarter of 2023 as demand continues to be buoyed by post-pandemic wanderlust.
According to the latest Deloitte Consumer Tracker, net spending in the leisure sector improved from -12.8 per cent in Q1 2023 to -11.0 per cent in Q2 2023. The most notable increase was in the long and short holiday categories, with a seven and six percentage point increase, respectively in Q2.
The upward trend points to consumers relaxing their recessionary behaviours due to a combination of salary increases, warmer weather, and pent-up demand for travel. The all-inclusive package holiday has remained popular despite the pressure on disposable incomes from inflation and rising interest rates.”
However, while there is an uplift in travel, Deloitte’s research found that leisure and hospitality has also been more exposed to high inflation given that it is energy, food and people intensive.
Why it matters
Travel and leisure demand shows no sign of slowing, with revenues no doubt benefiting greatly. However, hotel companies will still need to grapple with inflationary pressures, rising interest rates and higher energy costs, all of which could impact massively on the bottom line. Many travel and hospitality businesses have increased prices to offset rising costs, passing these costs to the consumer. However, it remains to be seen what effects these ever-increasing prices will have on the sector long term.
What they said
Andreas Scriven, partner and head of hospitality and leisure at Deloitte said: “Even with higher ticket prices, UK consumers seem to be prioritising spending on holidays above other discretionary expenses, particularly after years of pandemic travel restrictions, which has supported a recovery in the travel sector.
"In the medium term, the hospitality sector will have to manage high input costs – all the while wondering if robust consumer demand can continue to hold when disposable incomes are squeezed.”