Hospitality businesses’ worst fears confirmed

By Becky Paskin

- Last updated on GMT

Hospitality businesses’ worst fears confirmed
The hospitality and leisure (H&L) industry have had their’ worst fears confirmed’ today after news that the UK has officially entered a recession.

The hospitality and leisure (H&L) industry have had their’ worst fears confirmed’ today after news that the UK has officially entered a recession.

As gross domestic product fell by 1.5 per cent in the last three months of last year, following a 0.6 per cent drop in the previous quarter, the UK’s fear of entering a recession has been confirmed.

Liz Hall, head of research for H&L for PricewaterhouseCoopers​ (PwC) today said that while output declines for the hospitality and leisure industry was less than that of manufacturing, restaurants, hotels and pubs will feel a ‘significant reduction in revenues’ as consumers restrict their spending.

"The UK love affair with eating out and staying in hotels has been put on hold - but for how long we do not know,” she said. “Of course, as in previous recessions demand will one day recover. However, we do not know how many cold, dark winters and long, wet summers lie ahead for UK pubs, restaurants and hotels before they play their part in an upturn."

CBI deputy director-general John Cridland said the figures were much worse than expected, making them the ‘sharpest contraction in the economy since 1980.’

“The intensity and speed of falling demand combined with the global credit crunch mean this recession is going to be more painful than the early nineties, and sadly one consequence of this will be much higher unemployment,” he said. “Looking ahead, we hope the impact of interest rate cuts, falling inflation, the fiscal stimulus and the Government’s recent measures to kick-start lending will have a stabilising effect later this year.”

Gross domestic product for distribution, hotels and catering declined by -2.4 per cent in Q4 2008, compared with a -2.1 per cent drop in Q3, highlighting the consumer trend to reduce spending on unessential travel and entertainment.

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