Wednesday, July 17, 2024
Wednesday, July 17, 2024
HomeNewsBusiness News£32.7bn potential in hygiene, wellness and sustainable credentials

£32.7bn potential in hygiene, wellness and sustainable credentials

New Research by Barclays Corporate Banking makes for some interesting reading for the Hotel sector that could be worth £32.7bn from safety, hygiene, wellness, and sustainable credentials alone.

The report, called Leisure Rediscovered, covers all of the leisure and hospitality sectors in the UK and shows that overall the sector is thriving. Operators across the sector reveal that revenue jumped by an average of more than 25% over 2019 levels and they predict a rise to one-third for the remainder of 2021.

In terms of the contribution of the wider industry to the nation’s GDP, it is expected to add £3.5bn to GDP in 2021 rising to £9.2bn next year.  Restaurants and food outlets account for £1bn of the growth followed by hotels at £0.8bn.

The big winners are cafes and food outlets – including restaurants – holiday parks and vacation rentals.  Regionally, London amounts for 30% of the overall growth with the West Midlands at 18%, Wales 13%, and Scotland lagging behind at 3.5%.

Confidence is high in the broad sector with 94% of businesses confident about business growth this year, with a third who are very confident. Gym and leisure centre managers are most likely to be very confident (45%), with cafés and spas/wellness retreats (both 42%) also especially positive.  

Hotels, although confident of growth, are the most cautious of all with 16% of hotel owners describing themselves as “not too confident. It is reasonable to assume that this is due to the current staffing issues across the board.

The good news for hotels is that the report highlights the strength of the staycation market and this is set to continue throughout 2022. 45% of adults said that they were more likely to holiday in the UK and the Scottish Highlands remains one of the top 3 destinations with Edinburgh popular as a City break.

Although the staycation is most popular across all age groups it is strongest amongst those over 45 (48%).  As the staycation market grows, those changing their mind and now preferring the UK to overseas trips tend to be women over 55. 

The research has also looked into what holiday-makers are looking for and there are some notable changes as a result of the pandemic and the healthy leisure experience goes well beyond infection control.  Lockdown has made consumers much more aware of physical and mental health. 

Of note is the comment from operators that the ESG acronym (Environmental, Social, Governance) should also contain an H for Health with 9 out of 10 operators saying that health and wellbeing products were becoming a priority since the pandemic.

This new report underlines this imperative and shows that consumers are prepared to pay almost 20% more for healthier food and drink options and almost 18% more for holiday accommodations that include health or well-being services such as a gym or spa. 

The Barclays Wellness Imperative report from earlier this year had already identified a potential £21.1bn revenue boost by 2023 for leisure providers that are able to incorporate wellness into their offerings.

In terms of health and hygiene standards, almost a quarter of consumers now place a high value on good safety and hygiene standards in their accommodations.

Although 38% would not be prepared to pay a premium for this reassurance, younger people are particularly concerned. 41% of those 16-24 would pay a premium for these assurances while those over 55 would only pay just over 9% more. 

Like Health and Wellness, the average premium that consumers would pay is 20%.  This would represent a £6bn revenue lift to accommodation providers.

Sustainable credentials also remain high in the minds of younger consumers.  Those 16-24 would be prepared to pay a premium of 39% for strong credentials and those 25-35 would pay 32% more.

The average premium across all age groups is 20% for a sustainable holiday experience but, as with safety and hygiene,  the willingness to pay a premium declines with age.  

The value of these preferences alone is not insignificant – they were calculated to be worth £5.6bn to accommodation providers.

Outside of health and travel, the report also highlights the growth in importance of local partnerships.   88% of operators said that they were offering joint deals more often than they did in 2019 and this initiative is lead by almost all holiday and caravan parks, nightclubs (96%), and spas and wellness centres (90%). 

The pandemic has also resulted in a polarisation of experience for consumers – many amassed significant savings during the pandemic while many saw their savings dwindle.

Those that were able to make significant savings are spending and this has meant that many operators have found customers are willing to splash on on premium experiences with many expecting the luxury market to broaden further. The taste for luxury was particularly noted by holiday parks (55%), hotels (51%), bars (49%), spas (46%) ad holiday lets (45%).

Finally, the report found that more than four in 10 firms plan to add new outlets. This represents a significant leap in growth plans over the position a year earlier. For example, Travelodge, which is opening 17 new UK hotels this year, is among the 47% of hotel groups that have expansion plans. And the resurgence in gym membership has triggered a race for new space by 41% of leisure clubs.

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