UK hospitality businesses show strong growth as Covid restrictions ease

Hospitality businesses outpaced the rest of the UK economy during September 2021, according to new figures.

The latest Lloyds Bank UK Recovery Tracker shows that tourism and recreation — which includes pubs, hotels, restaurants, leisure facilities and travel agents — was the fastest growing sector for the first time in more than nine years.

The sector benefited from strong consumer demand for large-scale events, such as concerts and music festivals, as well as the easing and simplification of international travel rules in England, which led to a rise in people booking holidays abroad and more tourists visiting the UK.

There was also a strong rebound in the transport sector following a loosening of travel restrictions and more people commuting.

Overall, 10 of the 14 sectors monitored by the Tracker saw output rise in September, up from nine in August.

However, materials and staff shortages caused the output of three key manufacturing sectors to contract.

The monthly report also revealed that the rate of input cost inflation during September was the second highest in the Tracker’s history, as energy prices spiked and demand for labour intensified.

This led all 14 UK sectors to raise their prices, with transport operators and manufacturers of chemicals, food and drink, industrial goods and metals and mining products recording the sharpest month-on-month increases.

“Tourism and recreation outpaced other sectors in September because it continues to benefit from relaxations in Covid-19 restrictions and resurgent consumer demand,” commented Jeavon Lolay, head of Economics and Market Insight at Lloyds Bank Commercial Banking.

“As the UK economy continues to inch towards its pre-pandemic peak, logistical challenges, higher energy prices and uncertainty relating to the path of the virus as we head into winter are key risks. Policymakers will need to tread carefully in order to safeguard the recovery, with important fiscal and monetary policy decisions due in the coming weeks and months.”