Britain’s Booming Tourism Economy Gives Hospitality Businesses A Boost – Barclays Bank
- The UK’s tourism economy is thriving, with turnover for businesses in accommodation and food services up by 8.3% over the last year
- More Brits are choosing to holiday in the UK this year compared to 2016 (up five percentage points)
- But UK holidaymakers are feeling the pinch – average staycation spend is 14% less than in 2016
- However an influx of overseas tourism is plugging this gap, giving UK hospitality businesses a vital boost
As the nation gears up for the final bank holiday getaway of the year, new insight from Barclays Business reveals hospitality businesses in the UK are booming. Three quarters (75%) of UK adults have been on, or are planning a UK staycation this year1, up from 70% in 20162. Significantly, the average turnover of SMEs in the accommodation and food services sector rose by 8.3% in the first half of 2017 compared to the same period last year3.
Despite this increased appetite for a UK staycation, holiday budgets are feeling the pinch; the average staycation spend in 2017 is £530 – 14% less than 2016 when holidaymakers reported to spend £613 per average staycation. A quarter (23%) of those who are spending less say this is as they have less money than a year ago, and one in ten (11%) say they can’t afford to spend any more because the cost of living has increased. A further one in ten (10%) are cutting back on all holidays to save money for the future4.
However, the current value of the pound has helped to boost UK businesses in accommodation and food services. The UK has become an attractive holiday destination for many overseas tourists this year, which appears to be helping to plug the gap of spending by Brits. 3.5 million overseas residents chose to holiday in the UK in June 2017 – up 7% from the same period in 20165 – and these inbound tourists are willing to spend more. Visitors to the UK this year have an average budget of £3,4436, while in June alone, international tourists spent a total of £2.2bn – 2% more than the year before5. This increase in demand is not just boosting business income – British entrepreneurs have also been quick to respond, with 25,000 new accommodation and food services SMEs opened across 20167.
Why UK staycations continue to rise
The most popular reasons Brits opt to holiday in the UK include the fact that they like exploring the country (42%) and because there are so many fun things to do in the UK (31%). Cutting down on travel time by staying local is another important factor for 24%, while a fifth (20%) simply want to keep costs down and 6% prefer the British weather. Brexit has also influenced the number of Brits taking a staycation this year – 14% changed their holiday plans as a result of the vote, with 6% saying they were more likely to stay local. Further, one in ten adults planning a staycation (9%) were influenced by the value of the pound following the UK’s decision to leave the EU.
UK staycation hotspots
A third (33%) of people who have been on, or are planning a UK staycation opt for a holiday in the South West. Looking at specific towns, seaside resorts such as Conwy in North Wales are benefitting from tourism, where accommodation and food services SMEs account for 12.7% of total SME income. On the Isle of Wight, these businesses account for 11.6% of total SME income, and in Southend-on-Sea they make up 8.8% of income.
Ian Rand, CEO, Barclays Business Banking said:
“While it’s good news for the UK economy that more Brits are opting to spend their holidays in the UK, our poll shows purse strings are being tightened and domestic spend is down. However the weak pound is attracting growing numbers of inbound tourists, which is having a healthy impact on SME businesses in the accommodation and food services sectors.
“It is essential that UK businesses plan ahead and carefully position themselves to take advantage of the opportunities both domestic and overseas tourists can offer. Our research shows the value of both and it’s crucial businesses market their products and services to cater for a global market and diversify between seasons.”
1 Opinium Research carried out an online survey of 2,006 UK adults aged 18+ from 11 to 14 August 2017. Results have been weighted to representative criteria of the UK
2 Opinium Research carried out from 12 to 16 August 2016 revealed UK adults spent £613 per staycation
3 Based on data of c.42,000 Barclays Business customers – defined as small and medium enterprises (SME) with turnover of <£25million and within the accommodation and food services sectors. The Barclays Business Index tracks the total level of income (credit turnover) which is seasonally adjusted and smoothed to account for short-term volatility. Data sourced July 2017.
4 Opinium Research carried out an online survey of 2,006 UK adults aged 18+ from 16 to 18 August 2017. Results have been weighted to representative criteria of the UK
6 Barclays research, April 2017 https://www.barclayscorporate.com/insight-and-research/industry-expertise/destination-uk.html
7 Analysis based on new accommodation and food services Barclays Business current account customers in 2016. Defined as small and media enterprises (SME) with turnover of <£25million and within the accommodation and food services sectors. Data sourced July 2017.