Olympics puts a positive spin on leisure sector
- Published: 23 September 2008 11:22
- Last Updated: 23 September 2008 11:22
On the face of it the hotel and leisure sector appears strong, with the overall value of new projects starting on site during the first eight months 13 per cent up on a year ago. By Allan Wilen
However, strip out Olympics work and the value of new project starts fell 29 per cent over the same period. Consumers are cutting back on a wide range of discretionary spending, from nights out to gym membership.
This, coupled with the financial markets' troubles, is forcing companies to reappraise their investment plans.
In recent years the catering industry has been a reliable source of work. However the value of new pubs, restaurants and café projects has fallen sharply over the last year.
The flow of small-scale refurbishment and fit-out work is also being squeezed as the major chains have cut back their expansion and refurbishment expenditure. For example, both Starbucks and J D Wetherspoon have secured planning approval for half the number of the projects they took forward during the same period of 2007.
In addition to more cautious UK consumers, hoteliers are having to contend with the impact of a weak dollar, slower world economic growth and spiralling travel costs. The number of overseas visitors to the UK during the second quarter was four per cent down on a year ago.
After a strong rise in the value of hotel project starts during 2006 and 2007, this year has seen a sharp fall in new projects. While the budget end of the market remains relatively strong with Premier Inns pressing on with its expansion programme, the overall value of new hotel projects starting on site during the first eight months of 2008 was 43 per cent down on a year ago.
Recent consolidation in the private health-club market is set to continue, with companies under renewed pressure as consumers
cancel little-used gym memberships. While public sector investment in new and renewed leisure centre facilities has helped support activity, the year to date has seen an overall drop in the value of starts.
Against this underlying weakening in sector activity, the Olympics have provided a major boost to project starts, with work commencing on both the main stadium and the aquatic centre.
Allan Wilen is economics director at business information company Emap Glenigan
