See the big picture
Greater business confidence across the sector is, as ever, a reflection of broader consumer spending power and sentiment. Although hospitality and leisure operators are likely to bear the brunt of higher costs and lower margins in the short term, the new lower permanent multiplier for business rates announced in the Autumn Budget should go some way to improve the medium-term outlook.
Head of Hospitality and Leisure, Barclays Corporate Banking
As always, the sector will be directly impacted by consumers’ disposable incomes and their confidence to go out and spend. While real wage growth data suggests that people generally have more money available, this is not always necessarily translating into consumers having the confidence to spend it on discretionary activities.
It's generally recognised that consumers’ priorities appear to be changing, with pressure on the ‘squeezed middle’ as a result of customers either trading up to fewer but higher-quality entertainment options or trading down to take advantage of the plethora of food delivery and streaming services available to them at home.
I think these trends are very likely to continue over the short to medium term – so Hospitality & Leisure (H&L) operators may need to find new ways to offer value and build customer loyalty. Innovative strategies such as dynamic pricing depending on demand are likely to become more commonplace.
In the travel sector, many clients comment on the growing number of consumers who no longer appear to treat holidays as a discretionary treat but are instead building them into their budgets. In fact, in our recent research, holidays topped the list of what consumers intend to spend their money on in the next year.1
I expect travel to hold up this year – going on holiday appears to have become a mandatory, non-negotiable part of many people’s yearly expenditure.
Head of Hospitality and Leisure, Barclays Corporate Banking
Based on our recent research1, consumers are increasingly prioritising experiences such as concerts, sporting events, competitive socialising, destination restaurants, and unique accommodation. We have also identified a notable rise in spend on special occasions celebrated with personalised and memorable experiences.
From what I’m seeing in the market, this presents fantastic opportunities for H&L operators in 2025 and beyond if they can ensure their offerings are memorable and experiential, while providing the requisite value for money.
Over the next 12 months, two fifths of the H&L businesses we surveyed will be expanding their options to enable customers to personalise their experience, and just over a fifth plan to pivot their models to focus on events1. What’s more, as employees are generally responsible for delivering the memorable and personalised experiences that customers are seeking, I think we’re also likely to see an increased focus on operators investing in their recruitment and their team’s skills.
Investing in sustainability
My conversations with clients suggest that Environmental, Social and Governance (ESG) is likely to continue to play a big role for operators in 2025. This is the framework that helps businesses understand and measure their impact on society, the environment and how transparent and accountable it is.
Most of the businesses we surveyed last year said that ESG is important to their customers, and, as a result, they are working on building more sustainable supply chains and infrastructure. Our research also shows that investment in ESG-focused initiatives is expected to continue over the next two years, with more operators working towards BCorp status or equivalent compared to previously, and more focusing on the wellbeing and development of their workforce.1
Indeed, several operators say that ESG initiatives are key to attracting and retaining talent who want to work for companies that operate in ways that aligns with their values. Attracting the right people, and supporting their wellbeing in-role, is likely to continue to be vital in helping operators to provide the experiences their customers are looking for.
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Operators may need to adapt their offerings to cater for customers’ increased demand for experiences. Establishing how to cater to different audiences – whether those looking for value or something special – might be key to expanding reach and driving customer footfall and spend.
Having the right team in place with the right tools may well be the difference between those businesses that deliver the right experiences to their customers, and those that miss out. Investing in your staff and demonstrating that your organisation shares their values should support recruitment and retention of top talent.
A future-ready hospitality and leisure sector that provides seamless services and more personalised customer experiences will probably require the continued adoption of the latest data analytics techniques, customer relationship management tools and other innovative technologies.
Keeping fraud front of mind
Fraudsters are as active as ever across the hospitality and leisure sector, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.
To discuss your business requirements and how Barclays can support you, contact us today.
