Unveiling the  Challenges and Opportunities in the 2023 Hospitality Industry 

As we approach the festive season in 2023, the hospitality industry is experiencing a unique blend of challenges and opportunities that are reshaping the way we enjoy our leisure time. Trends observed during the first week of December this year show the sector continues to confront a complex trading environment characterized by inflationary pressures, changing consumer behaviours, and the rising cost of living.

Download the 2022 vs 2019 High Street data at the end of this article.

Challenges Persist Despite 2022 Growth:

In 2022, the hospitality sector witnessed a surge in visitor numbers during the festive season, with restaurants and pubs experiencing an increase in foot traffic by 2.3% compared to 2019. However, the last years positive momentum appears to be offset by the ongoing challenges faced by the industry with footfall in the first week of December lagging 6.8% behind the same week in 2019. While inflationary costs are exerting sustained pressure on the sector’s margins, its clear these economic pressures are also affecting the disposable income of patrons. 

Impact of Inflation on the Licensed Leisure Sector:

Among the various components of the leisure market, the licensed leisure sector seems to be the first and hardest hit by the inflationary pressures and the rising cost of living. This holds particularly true for the wet-led pub, bar, and club industry, where challenges are acutely felt. The financial burden of these challenges has translated into changes in consumer behaviour, as people recalibrate their leisure choices in response to economic realities.

Last year, pubs emerged as the second most popular Christmas destination, trailing only by Christmas markets.  This year the leisure sector, across nearly all leisure types, continues to lead the way. Look out for deep dive into the economic benefits of Christmas markets next week! 

 Regional Resilience in Hospitality:

City centres have faced distinct challenges, where the shift to remote work has dramatically altered the typical city visitor profile. However, regional locations have witnessed a significant uptick in their fortunes, marking a turnaround that has enabled businesses to return to profitability.

A noteworthy 35% of all hospitality visits made in the first week of December 2023 were attributed to regional establishments. A significant increase from 24% in 2019.

The regional success story is particularly pronounced in coastal towns and university locations, where hospitality visits are more than 22% ahead of 2019. The result has been a boom for local businesses, as people spend more of their time closer to home.

Balancing Priorities in 2023:

While many consumers have returned to hospitality venues since the pandemic, a significant number are reprioritizing their spending for essential holiday expenses, such as gifts, travel, and Christmas meals. This altered financial focus has impacted the hospitality sector’s performance and further highlights the dynamic nature of consumer choices in the midst of economic uncertainties.

This year we are continuing to track the High Streets of the busiest cities across the UK – identifying which cities have recovered post Covid and which have fallen behind.  Our 2023 mobility data, will be released next month but in advance of this you can download last years data for free.  

Download the slide deck here: