Holidays suffer as consumers cut back on spending

Holidays suffer as consumers cut back on spending

Consumers continued to cut back on leisure spending in the third quarter – with holidays among the affected sectors, a new survey reveals.

Holiday spending has seen a decline in the last year, with spending on short breaks of four nights or less having fallen by three percentage points, with longer breaks down by two percentage points since the same period in 2016.

Spending on attending live sports events remained flat year-on-year, and was the only leisure category not to see a fall in spending, according to the latest findings from a poll of 3,000 adults by Deloitte.

The quarterly survey found that almost every leisure category has seen a decline in spending year-on-year, indicating that consumers are more cautious compared to 2016.

Spending intentions for the next three months have also seen a year-on-year decline across the majority of leisure categories.

Younger consumers – those aged 18-34– appear to be feeling the effects of rising inflation and lower disposable income more than any other age group.

Millennials are planning to spend less across the majority of leisure categories over the next three months compared to spending intentions at the same time last year, including eating out and culture and entertainment.

On a quarterly basis, expected spending has risen for more discretionary activities, such as holiday breaks – up three percentage points – and attending live sport events, indicating that younger consumers are shifting their spending in order to pay for ‘must do’ leisure activities.

Those aged 55 and older have been less affected by cost pressures, but they intend to cut back on future leisure spending across a number of categories including habitual spending and, significantly, holidays, the report highlighted.

Deloitte hospitality and leisure partner Simon Oaten said: “The combination of rising inflation and lower wage growth is stretching disposable incomes and causing consumers to rethink their expenditure. It is no surprise that we are seeing UK consumers tightening their belts.”

He added: “Significantly, consumers are becoming savvier and are making deliberate choices about their spending. They are identifying habitual leisure activities, such as buying a daily coffee or dining out at a restaurant, and are making more conscious efforts to reduce spending, perhaps by buying a coffee every other day, or by making cheaper menu selections.”

Oaten concludes: “The well documented combination of rising inflation and minimal real wage growth has certainly impacted younger leisure consumers more than any other age group.

“As a result, millennials are reprioritising their leisure spending towards big ticket items, such as holidays and live sports.

“However, the fact that older consumers are no longer able to protect their leisure spending is a sign of a tipping point. It is likely that bars, restaurants and cafes will be feeling the effects of consumers’ self-imposed austerity measures.”

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