Due to a combination of factors, such as the impact from the pandemic, the energy price cap lift, debt, rising taxes, inflation, the rising cost of goods and services, and war, undoubtedly, life has gotten more expensive.
There is palpable concern about the cost-of-living crisis which is predicted to hit hospitality, so to help our clients manage expectations and to support them with solutions, we recently asked you how you anticipate the cost of living crisis impacting you, in our latest survey.
Unfortunately, the effects of the crisis are already widely felt amongst you, as nearly 9 out of 10 (87%) say that inflation has had an impact on your disposable income.
The reaction has been very similar across all age groups, apart from people aged 56-65 who appear to be slightly less affected than other age groups, as 78% of the 56-65-year olds report being affected by the crisis, versus the average of 87%.
Unsurprisingly, the financial impact seems to be biggest among the youngest (18-25-year-olds; 90%) and the oldest (66+; 91%) respondents.
There’s no significant difference between genders on this matter, men and women have been affected alike.
Some luxuries are harder to forgo than others. From our research, we identified top spending priorities in a Maslow’s-pyramid-style approach, starting with the lowest priority (the first thing people would stop spending money on), and ending with the last thing they would stop spending on - the luxury that you will most likely be spending on, or saving up for.
Our results indicate that the delivery & takeaway market may soon see a decline after a long period of success and stability.
It’s surprising to see ‘eating / drinking out’ ranking above retail, especially because, in a survey we conducted in November 2021, 83% of you said they would rather spend money on experiences, than goods.
A possible explanation for the drastic change opinion in such a short time could be, that whilst cooped up due to numerous lockdowns and restrictions, there was ample opportunity for customers to conduct (online) shopping, whereas spending on experiences had previously not been feasible, and this created a pent-up demand for experiences.
Now, at a time of recession, people are spending more on tangible, materialistic things, which may have practical uses, or even resale value – guided by a nesting / hoarding instinct. This, of course, is pure conjecture.
UK domestic holiday sector, which saw a boom last year due to travel restrictions and the bureaucratic nightmare of testing and vaccine passports, looks to be in a good position again this year, as you see UK holidays as top priority for spending disposable income on amidst a budget crunch. This is likely boosted by the current well-publicised chaos surrounding air-travel abroad, putting many potential travellers off.
We asked you whether you would prefer to go to cheaper places than you were used to, or if you’d rather reduce the frequency of visits and keep going to your usual places, if there wasn't enough disposable income to carry on as per your usual habits. Responses were analysed both across the hospitality sector as a whole, and also to see how individual sectors compared.
For the hospitality sector as a whole, almost 3 out 4 (72%) would rather reduce visit frequency than to trade down to a cheaper alternative.
It's very interesting, however, to see how opinions vary across the different sectors of hospitality: dining, quick service, leisure, accommodation and drinking out.
The highest percentage of you opting for the reduction of frequency, rather than cost, were in identified in the quick service sector (79%), meaning that people are least likely to choose a cheaper alternative to the place they usually get their lunch / coffee from - you'd would rather just go less often. One can assume that this statistic would be a good indicator for brand loyalty - suggesting that brand loyalty is highest for the quick service sector, over other sectors. Quick service was followed by dining out (76%), drinking out (70%), leisure (69%) and then finally accommodation (65%).
From a demographic perspective, Gen-Z (18-25) respondents consistently showed far lower percentages for choosing to reduce frequency over cost than any other age group. In leisure and accommodation sectors, more Gen-Z respondents actually preferred to find a cheaper alternative, rather than decrease visit frequency. For both leisure and accommodation, the percentage of Gen-Z consumers who would choose to reduce frequency was only 38%. Across different sectors and age groups, those are the only two instances where the majority is for finding a cheaper alternative, therefore, for businesses that target Gen-Z customers across leisure and accommodation sectors, the pricing strategy will be an especially important consideration. The highest percentages for visiting less frequently over choosing a cheaper alternative were in the 66+ age category.
From a gender perspective, a couple of interesting patterns emerged. Men had consistently lower scores than women, across all sectors but one. Going out for drinks, 71% of male respondents would choose to reduce frequency over cost, whereas that figure is 70% with female consumers.
Whilst male and female responses were pretty similar for quick service, leisure and drinks, there were stark differences in opinion for dining out and accommodation. For the dining sector, 79% of women would choose to reduce frequency over a cheaper alternative, whereas that figure is only 69% with men, and for the accommodation sector, the percentages are, respectively, 69% and 58%.
We asked you whether you would implement any of the following ideas to save money, in a quick-poll format:
