Hospitality spending bounce back may come later in the summer

12 April 2021 by
Hospitality spending bounce back may come later in the summer

There is significant pent-up consumer demand for hospitality and leisure but research suggests the spending bounce-back for hospitality may not return until later in the summer when more people have been vaccinated.

According to a survey of 1,000 UK consumers by the EY Future Consumer Index, 65% felt uncomfortable going to a bar or pub, while 57% felt wary about returning to eat in a restaurant, despite the industry reopening outdoors from today. These figures have increased from October, when 52% were hesitant about pubs and bars and 37% were uncomfortable about returning to restaurants.

Over half (55%) of those surveyed said the virus will only stop affecting their daily lives after most the population has been vaccinated.

EY's research suggests this behaviour is not being driven just by health and safety concerns, but because the customer experience will take time to return to normal. Over two-thirds (69%) of consumers think it will take months or longer before restaurants and bars return to normal, while 42% expect their experience of eating out to worsen in the long term, leading to 43% trying at-home meal experiences to replace eating out in the past weeks.

Consumers intend to keep buying from restaurants to eat at home, with 19% planning to spend more on meal kit deliveries post-Covid-19, while 16% will spend more on takeaway meals.

"Outdoors-only service will be a challenge for many operators due to lack of suitable space and the weather-dependent nature of business," said Andy Fyffe, EY's UK&I beverages and pubs leader for UK and Ireland.

"Therefore, a majority of businesses are choosing to delay reopening until May when indoors service is expected to be able to resume. However, as long as social distancing measures remain in place, most hospitality businesses will be unable to operate at capacity and many will find it challenging to reach pre-pandemic levels of profitability."

He added: "Throughout the pandemic, some businesses have been able to adapt their offerings creatively, such as pivoting to catering for at-home consumption. Sector leaders need to recognise and understand where there has been a permanent shift in consumer preferences and continue to adapt to accommodate these changes. The more a business is able to innovate, the better chance it has at remaining resilient."

The research also reported 24% of consumers expect to work from home more often in the longer term, while 20% expect to travel less for work. In addition, the appetite for holidays has increased slightly, with 43% planning to spend more on a holiday in the coming months, up from 31% in October.

Photo: Shutterstock

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