Passion for leisure

Since the EU referendum vote in July 2016, leisure businesses have continued to face uncertainty over its impact on consumers. Helped by recent favourable economic conditions, however, such as low inflation, low unemployment and low interest rates, our latest Q4 survey results show an increased propensity to spend amongst millennials, who report spending more on experiences such as eating and drinking out over the last three months.

In addition, overall spending on in-home leisure activities has seen a rise across all age groups, with consumers intending to spend the same or less in most categories in the first three months of 2017.

Key findings from the Q4 2016 survey results are outlined below.

Q4 2016 update

• The Q4 2016 Deloitte Consumer Tracker reported that the leisure sector has continued its upwards trend with restaurant and hotel net spending growth entering positive territory.
• The net number of people aged 18-34 who reported spending more on eating and drinking out rose three points from -8 in Q3 to -5 in Q4.
• The net number of people who reported spending more on eating and drinking out aged 35-54 fell by 1 percentage point from -10 to -11, and by two percentage points for the over 55s from -9 to -11.
• Consumers in London and the North reported spending more on eating and drinking out in Q4 compared to Q3.
• Consumers in the Midlands and South West reported a three point fall in the number of people who spent more on eating out and going to pubs over Q4.
• In the coming three months, 18-34 year olds expect to spend less on eating and drinking out than they did in Q4 and more on short and long break holidays.
• Spending on in-home leisure activities, such as TV/film subscriptions, video gaming and takeaways, increased by one percentage point from the previous quarter across all age groups.
• As expected for the time of year, spending on sport and gym activities fell by three percentage points over the last quarter.

Report overview

Consumer behaviour is changing as the growth of the collaborative economy and a rise in spending in the leisure sector is seeing consumers shift away from spending money on owning goods and services, to becoming more comfortable paying for access to goods, services and experiences.

Consumers increasingly want to enrich their lives with experiences and make their spare time more enjoyable by seeking services that bring convenience and enjoyment.

Simultaneously the broader macroeconomic drivers have helped consumers to have more disposable income, which they are increasingly choosing to spend on leisure activities.

The report discusses the rise of the leisure consumer and provides a Deloitte view on the significance of the UK Leisure Consumer to the economy. Using proprietary consumer research it provides a picture of current consumer expenditure on leisure and an outlook on how that is likely to develop.

Key findings

• Economic conditions have supported the emergence of a more confident leisure consumer with more disposable income to spend on leisure.
• The consumer mind set is evolving as they seek experiences that enrich lives, add convenience and create memories.
• Consumer expenditure on leisure has grown nearly twice as fast as total consumer expenditure with 95% of UK consumers having spent on leisure in Q1 2016.
• The leisure sector is now broader than before with the sharing economy at the forefront of introducing innovative leisure offerings using new business models.
• A new classification of leisure activities has emerged - considered, occasional leisure activities and frequent, habitual leisure activities.
• The leisure sector is a growing but often underestimated industry worth £117 billion in revenue that accounted for 7.4% of UK GDP.

Brexit implications

Whilst the outlook for the leisure sector at the start of Q2 2016 was positive with consumers in a bullish mood, the result of the EU referendum has led to uncertainty which may impact a leisure sector reliant on discretionary spending. In the longer term, the impact of leaving the EU will largely depend on the terms of the exit and their effect on consumers, employees and investors.

According to the research, if faced with less money, consumers would be likely to reduce spending on frequent, habitual leisure activities such as betting and gaming (45%) eating out (39%) and drinking out (38%).

The UK leisure sector has proven to be relatively robust in the face of recent economic shocks, supported by the growth of habitual leisure spend, as UK consumers have chosen to prioritise their spending in this area. Given the recent result of the referendum, it is now more important than ever that we understand and monitor the performance of the UK leisure sector, treating it as a barometer of consumer confidence.