Spending growth in hotels, bars and restaurants slows in June

11 July 2016 by
Spending growth in hotels, bars and restaurants slows in June

Spending growth at hotels, bars and restaurants in June this year slowed to its lowest level since January 2013.

That's according to the latest Consumer Spending Index from Visa, which does not take into account the impact of the EU referendum result (which took place on 23 June).

Compiled by Markit, the Index is distinct from Visa's business performance and reflects overall consumer spending, not just that on cards.

However, growth in spend on hotels, bars and restaurant was still higher, at 3.3%, than the overall figure of 0.9%.

Overall spending growth held close to May's 27-month low, according to Visa.

Kevin Jenkins, UK & Ireland Managing Director at Visa said: "All eyes will be on consumer spending data as we assess the outcome of the referendum. With the result coming late in the month, this report doesn't give the full picture but there's a clear trend over recent months showing a slowdown in overall growth. The Index shows that discretionary spending has been the worst affected area. June rounded off the weakest quarterly growth since Q1 2014, following a marked drop in May to a 27-month low.

"The transport and communication sector, which includes car purchases and flight bookings, suffered another big drop. Industry reports of new car sales falling in June provided further evidence that people are holding back on big-ticket purchases."

"Meanwhile, hotels, restaurants and bars, which had been the best performing sector in the past year, saw growth slow to its weakest level since January 2013 with little evidence of the summer's sporting events providing any significant boost."

Josh Beer, the Illustrious Pub Company, Cambridgeshire, added: "June was a challenging month for us, with overall spend down 4%, perhaps because people were either away on holiday or chose to watch the Euros with friends at home. We did however experience a boost in spend in one branch where a TV was installed and special platters were served to accommodate England fans.

"Looking ahead, we expect that our pubs will perform well, and don't believe that the referendum will impact our overall sales. But as a small business we are a bit concerned about how the uncertainty around Brexit may impact banks' lending to businesses for renovation and development.

Meanwhile, Quan Nguyen, Chi Cafe, London, said: "While sales were up in the first half of June, the last two weeks saw a slight drop. It's perhaps too early though to say whether the drop in sales was down to the vote, or just because of the wet weather. Being in central London, a lot of our customers said they are worried about their job prospects now, and we fear this whole uncertainty may eventually impact our sales."

Consumer spending slows but hospitality continues to perform well >>

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