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 In
overall terms, hotel, entertainment and leisure has performed relatively
well in the current economic climate compared with other sectors in the
construction industry. In terms of construction output, values reached
around £5.8bn making 2010 the second best year for 6 years and only 8%
down on pre-recessionary levels in 2008.
However, since 2008, there has
been a decline in the rate of capital investment going into development
with many leisure operators cutting back on capex and delaying expansion
plans until the future of the economy becomes clearer and development
finance is more readily available.
Before the downturn, pubs and
bars and hotel sectors in particular were investing substantial sums on
re-branding and refurbishment programmes driving growth in the sector with
annual sums of around £6.5bn in 2008. This figure now stands at around
£5.2bn.
The fortunes of the
entertainment & leisure sector are largely dependent on levels of consumer
confidence and willingness to spend on non-essential goods and services.
Consumer spending has been affected by the financial crisis leading to
consumers seeking best value in the leisure market. As a result, certain
elements of the leisure sector have remained relatively buoyant throughout
the recession, with budget hotels, caravan parks and holiday camp
operators taking advantage of the ‘staycation’ trend among British
consumers. The outlook for the sector therefore remains mixed with
significant expansion plans announced by the budget hotels sector
contrasting with less buoyant prospects for sectors such as
restaurants/pubs. In addition, public sector entertainment output will be
affected by budget cuts.
The staycation trend has also
resulted in an increased demand for luxury accommodation and has driven
demand in the upscale hotel sector. This trend is part of a wider move
towards consumers looking for higher quality when spending their
disposable income and has also been seen in the grocery sector, where
higher end supermarket brands such as Waitrose have seen increased sales
during the recession.
A further trend emerging from
the recession is the rise in popularity of the budget gym sector, where
membership prices are on average around 50% cheaper than for traditional
clubs. As in the hotel sector, the budget gym market is forecast to
increase market share as consumers look to spend existing disposable
income more wisely. Many budget operators are seeing the downturn as an
opportunity and have aggressive expansion plans for 2011 and beyond.
The outlook for the hotel,
entertainment and leisure construction sector in 2011 indicates further
moderate gains of 3-4% to a forecast value of around £6bn in output value.
However, the medium-term outlook is for output to decline by between 2 and
3.5% a year to 2014 as the impact of the Olympics declines after mid 2012,
coupled with expectations of significant reductions in public sector
programmes from April 2011 onwards. The sector is expected to return to
growth in 2015 with output value currently forecast at around £5.8bn.
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