The final quarter of 2024 painted a mixed picture for the UK leisure sector. The Deloitte Consumer Tracker data shows total net spending in the leisure sector fell from -8.5% in Q3 2024 to -10% in Q4 2024. However, in a sign that consumers continue to prioritise services over goods, including ringfencing their holiday budgets, spending in the leisure sector rose year on year. The overall fall in the results on a quarterly basis reflects in part the time of year with festive period expenditures stretching people’s budgets. The fall in overall leisure spending also points to the effect that negative economic news post-budget has been having on the mood of an already cost-conscious consumer after the prolonged period of high inflation from 2021 to 2023. 

Out of the 11 leisure categories tracked in the survey, seven saw a quarter-on-quarter decline in net spending, although the decline was marginal in five of those categories including culture and entertainment, going to the gym or playing sport, attending live sports events, eating out and other leisure activities. A fall in spending on out-of-home sporting or cultural experiences points to consumers prioritising their non-essential spending towards socialising in part due to the time of year. However, consumers were still looking to enjoy themselves by spending on those more affordable social or home-comfort experiences. Consumers opted for visiting pubs and bars to socialise over the more expensive alternative of eating out. Categories that saw increased expenditure in Q4 include in-home leisure activity (+2.7 percentage points), drinking in coffee shops or sandwich shops (+1.5 percentage points), betting and gaming (+1 percentage points) and drinking in pubs and bars (0.7 percentage point increase).

There was a more significant fall for both short and long holidays recording a -10.4 and -9.5 percentage point drop, respectively. These results reflect the post-summer period where consumers are less likely to spend on travelling. The downward trend also points to some consumers reassessing their attitudes to travel including opting to travel out of peak season or postponing trips altogether. 

Outlook for Q1 2025

Spending intentions for Q1 2025 reflect seasonality with a higher proportion of consumers intending to spend more on booking their next holiday or focusing on their health by visiting a gym or playing a sport. Spending intentions on both long and short holidays are expected to see quarter-on-quarter growth of +5.4 and +4.2 percentage points, respectively, while spending intentions on going to the gym or playing a sport are expected to grow by 1.4 percentage points. As expected following Christmas, fewer consumers intend to spend more in bars or restaurants compared with Q4 2024. There is a notable drop in spending intentions in drinking in pubs and bars (-6 percentage points) and in eating out (-4.4 percentage points). Consumers drinking in coffee shops and sandwich shops is also expected to decline (-2.8 percentage points). However, compared with Q1 2024, a higher proportion of consumers intend to spend more on eating and drinking out in Q1 2025. This is an encouraging sign that despite the seasonal drop, consumers might be easing their more cautious spending behaviours.

The UK leisure sector continues to benefit from consumers prioritising spending on experiences, but budgets continue to be constrained by higher costs leading to consumers having to make certain trade-offs. Consumers will continue to look for value whether it is selecting that all-inclusive holiday closer to home, shortening their trip to afford a foreign holiday, or opting for the set menu rather than an a la carte dining experience at a restaurant. However, consumers continue to be more demanding expecting experiences that are more tailored to both their needs and budgets without compromising on quality.

Overall, the prospect of a consumer recovery in 2025 will depend on how inflationary the environment might become and how manageable it would be for consumers especially in the more essential categories like food and energy costs. Consumer demand in the leisure and hospitality sector could remain subdued while the post-budget uncertainty settles in the first half of this year. Beyond that, with the rise in the minimum living wage, more public spending and expected interest rates cuts, combined with consumer confidence recovering, we should see demand improving especially in the more discretionary categories such as socialising and going out.