Slow October Growth in Hospitality Despite Rise in Licensed Venues

6

UK hospitality saw just 0.6% sales growth in October 2024, with Halloween boosting pubs. Concerns linger over consumer confidence and rising costs ahead of Christmas.

The State of Hospitality: Navigating Challenges in October 2024

The hospitality sector in the UK faced sluggish growth in October 2024. According to the CGA’s Hospitality Business Tracker, overall sales increased by a mere 0.6% year-on-year. This was despite the rise in new openings during the same month. Notably, sales within the M25 saw a decrease of 0.1%. Conversely, areas outside this region experienced a modest increase of 0.9%.

Such figures highlight a concerning trend. Specifically, it marks four consecutive months of below-inflation growth. This stagnation raises questions about consumer confidence and spending habits amidst rising costs. Additionally, poor weather conditions throughout October may have contributed to these results.

Moreover, upcoming challenges loom over the critical Christmas trading period. Operators are anxious about maintaining sales levels as inflationary pressures persist. The recent government Budget has also added to concerns with potential tax increases on businesses.

Halloween Impact: A Temporary Boost for Pubs and Bars

Despite the overall sluggish growth, Halloween festivities provided a temporary uplift for pubs and bars in early November. CGA’s tracker noted that managed pubs achieved a like-for-like sales growth of 1.5%. This suggests that seasonal events can still attract consumers, even during tough economic times.

However, not all segments enjoyed similar success. Restaurants faced challenges, recording a decline of 0.1% in sales during October. Additionally, bar sales dropped by 4.2% compared to October 2023 levels. On-the-go groups performed best among major segments with an impressive growth rate of 4.3%.

These mixed results illustrate the volatility within the hospitality industry. While some venues benefit from seasonal events, others struggle to maintain momentum amidst economic pressures.

Future Outlook: Preparing for an Uncertain Landscape

Looking ahead, industry experts emphasize that conditions may remain challenging well into 2025. Karl Chessell from CGA expressed concerns about real-terms growth remaining elusive for many operators. The impending tax burdens outlined in the recent Budget could further strain margins for hospitality businesses.

Furthermore, Saxon Moseley from RSM UK highlighted that consumers’ hesitations about spending could be detrimental during crucial trading periods like Christmas. Although proposed fiscal changes did not directly raise consumer taxes, their impact on businesses is expected to be significant.

Operators may have little choice but to increase prices in response to rising costs and wage increases. However, without substantial improvements in consumer confidence, translating these price hikes into positive sales remains uncertain.

In conclusion, while there are glimmers of hope amid Halloween festivities and new openings, the overall landscape for hospitality remains precarious as we approach the holiday season.

Photo by sickk vibes on Unsplash

Source: Harpers – Hospitality endures sluggish October growth despite licensed premises rise