New insight from Barclays Business reveals hospitality businesses in the UK are booming. Three quarters (75%) of UK adults have been on, or are planning a UK staycation this year, up from 70% in 2016. Significantly, the average turnover of SMEs in the accommodation and food services sector rose by 8.3% in the first half of 2017 compared to the same period last year.
Despite this increased appetite for a UK staycation, holiday budgets are feeling the pinch; the average staycation spend in 2017 is £530 – 14% less than 2016 when holidaymakers reported to spend £613 per average staycation. A quarter (23%) of those who are spending less say this is as they have less money than a year ago, and one in ten (11%) say they can’t afford to spend any more because the cost of living has increased. A further one in ten (10%) are cutting back on all holidays to save money for the future.
However, the current value of the pound has helped to boost UK businesses in accommodation and food services. The UK has become an attractive holiday destination for many overseas tourists this year, which appears to be helping to plug the gap of spending by Brits. 3.5 million overseas residents chose to holiday in the UK in June 2017 – up 7% from the same period in 2016 – and these inbound tourists are willing to spend more. Visitors to the UK this year have an average budget of £3,443, while in June alone, international tourists spent a total of £2.2bn – 2% more than the year before. This increase in demand is not just boosting business income – British entrepreneurs have also been quick to respond, with 25,000 new accommodation and food services SMEs opened across 2016.
Why staycations continue to rise
The most popular reasons Brits opt to holiday in the UK include the fact that they like exploring the country (42%) and because there are so many fun things to do in the UK (31%). Cutting down on travel time by staying local is another important factor for 24%, while a fifth (20%) simply want to keep costs down and 6% prefer the British weather. Brexit has also influenced the number of Brits taking a staycation this year – 14% changed their holiday plans as a result of the vote, with 6% saying they were more likely to stay local. Further, one in ten adults planning a staycation (9%) were influenced by the value of the pound following the UK’s decision to leave the EU.
UK staycation hotspots
A third (33%) of people who have been on, or are planning a UK staycation opt for a holiday in the South West. Looking at specific towns, seaside resorts such as Conwy in North Wales are benefitting from tourism, where accommodation and food services SMEs account for 12.7% of total SME income. On the Isle of Wight, these businesses account for 11.6% of total SME income, and in Southend-on-Sea they make up 8.8% of income.
Mike Hayden, Head of SME Banking for Barclays in South Wales said:
“While it’s good news for the Welsh economy that more Brits are opting to spend their holidays in the UK, our poll shows purse strings are being tightened and domestic spend is down. However the weak pound is attracting growing numbers of inbound tourists, which is having a healthy impact on SME businesses in the accommodation and food services sectors.
“It is essential that Welsh businesses plan ahead and carefully position themselves to take advantage of the opportunities both domestic and overseas tourists can offer. Our research shows the value of both and it’s crucial businesses market their products and services to cater for a global market and diversify between seasons.”