A look back at Q2 2024

After two consecutive quarters of decline, spending in the leisure sector improved in Q2 2024. The Deloitte Consumer Tracker saw total net spending in the leisure sector rise from -13.4% in Q1 2024 to -10.3% in Q2 2024, coinciding with a recovery in consumer confidence and discretionary spending. The upward trend points to consumers continuing to ease their recessionary behaviours due to the combination of strong wage growth, falling inflation and multiple bank holidays in Q2 2024. The quarterly improvement was driven by an increase in spending sentiment across 10 of the 11 leisure categories measured by the Deloitte Consumer Tracker, with the most significant increase in net spending around the short and long holiday categories, with a 7.4 and 7.3 percentage point increase respectively. One reason could be the growing popularity of consumers combining leisure activities with business trips in the post-COVID era a highlighted in the latest Deloitte Travel Weekly Annual Insight Report 2023-24. Flexible remote working policies offered by organisations have led to an increase in consumers planning short breaks to improve their work-life balance. However, consumers are also opting to secure value for money deals and all-inclusive packages have remained popular as a result. Demand in peak trading periods, for example the summer and winter holidays, has remained strong but at the cost of weakening demand in the off-peak periods. Demand for domestic holidays or staycations rebounds as families seek cheap deals at home over European travel for half-term and summer breaks, however, demand for travel may not continue at the same pace after the summer.¹

Warmer weather and multiple bank holidays in Q2 2024 have contributed to an increase in net spending on eating out, drinking in pubs and bars, and drinking in coffee shops and sandwich shops, with a 5.3, 4.4 and 3.8 percentage point increase respectively in Q2.  The pub sector has endured a difficult time over the last few years, emerging from the pandemic into a period of surging inflation, labour shortages and a cost of living crisis. Many of those headwinds are now easing to some degree, with events such as the Euro 2024 championship and Paris Olympics expected to provide a boost for the sector. Heineken, the world’s second largest brewer, which owns 2,400 pubs in the UK, recently announced plans to reopen several UK pubs that it has closed in recent years as the group is regaining confidence that the cost of living pressures are easing.²

There were further improvements in other areas in Q2 including rises in net spending sentiment on culture and entertainment (up 1.4 percentage point), on attending live sports events (up 1.3 percentage points), and in other leisure activities (up 2.2 percentage points). These improvements can be attributed to the line-up of music festivals, concerts and international sporting events all taking place this summer.

The only category to see a decline in net spending was betting and gaming (-1.4 percentage point decrease).  However, spending in the category remains 0.6 percentage points higher when compared with the same period last year but -2.4 percentage points  lower than before the pandemic. 

Outlook for Q3 2024
 

As we look ahead to Q3 2024, the leisure sector is expected to continue its recovery, driven by demand linked to seasonality and to improving economic conditions. Our data shows that consumers intend to spend more in Q3 across 8 out of the 11 categories measured in our Tracker, suggesting a robust outlook for the sector. The only notable decline is in the short and long holiday categories ( -1.5 and -0.8 percentage points respectively). Demand in peak trading periods, for example the summer and winter holidays, has remained strong, but at the cost of weakening demand in the off-peak periods. After a busy summer with school holidays and getaways, consumers are likely to cut back on their travel spending. Spending on betting and gaming is also expected to drop with a 1.3 percentage point decline expected in Q3 compared with Q2. This could be linked to the current regulatory environment in the sector as well as a shift in consumer preferences away from the category. 

Consumers are intending to continue spending more on drinking in pubs/bars (3 percentage point increase) and drinking in coffee shops/sandwich shops (2.5 percentage point increase). This rise highlights the resurgence of consumers to socialise in pubs/ bars and to watch sporting events. The eating out category has also seen an increase of 0.5 percentage points, indicating steady growth in consumer interest to dine out and make the most of the warmer weather. 

The net spending sentiment intention data on going to the gym or playing sports saw a modest increase, indicating that consumers are continuing to focus on health and wellbeing. There is also a two percentage point increase in the attending live sports category which is driven by major tournaments taking place this summer. 

As economic conditions improve and consumer confidence strengthens, the leisure sector’s recovery is expected to continue. Businesses in the leisure and hospitality sectors should capitalise on the improving consumer sentiment by attracting customers with value for money experiences and personalised services. Bundling services and creating premium offerings can also encourage higher spending. There should also be an increased focus on ways to improve profitability including streamlining operations to reduce costs while trying to maintain the quality of services and products. 

1. Britons opt for staycations over May holiday as cost pressures ease (ft.com) 
2. Heineken to reopen closed UK pubs as cost of living pressures ease (ft.com)