Hospitality and leisure sector boosts investment in the experience economy despite rising costs

Barclays’ new Hospitality & Leisure (H&L) report reveals that businesses are continuing to invest and expand, particularly in providing experience-led offerings, even as rising costs and geopolitical uncertainty impacts confidence and consumer spending.

Anonymised Barclays’ client data from 73,000 UK Hospitality & Leisure (H&L) businesses, combined with Business Prosperity research from 500 industry leaders and 2000 consumers shows how the sector is adapting quickly to harness customer demand amid a challenging operating environment.

Key findings include:

• 51 per cent of H&L businesses are planning to expand in the next three years
• 65 per cent are increasing investment in experience-led offerings
• 60 per cent say demand for memorable experiences is growing faster than demand for physical products
• 60 per cent expect the summer’s sporting, cultural and entertainment events to have a positive impact on their business
• 56 per cent of consumers plan to spend the same or more on experiences and events this summer
• Across all H&L businesses – 88 per cent are confident in their prospects over the next year (in comparison to 83 per cent of businesses across all sectors)

Experience-led investment underpins growth strategy

Two in five (39 per cent) H&L businesses are focusing on improving the overall quality of the customer experience and are also investing in initiatives such as loyalty schemes or subscriptions (38 per cent). This reflects a broader shift in consumer preferences, as businesses look to capitalise on a packed summer of public events and sporting fixtures.

However, this proactive approach sits alongside a more cautious consumer and cost environment. Seven in 10 (72 per cent) consumers expect tensions in the Middle East to impact the cost of living throughout 2026, and 57 per cent are concerned the cost of experiences and events will climb this summer as a result.

While 45 per cent are responding by cutting discretionary spending or delaying major financial decisions (26 per cent), demand remains resilient. Many still plan to prioritise spending on experiences, with two thirds (66 per cent) reporting that events and experiences boost their mental wellbeing and happiness.

Customer demand for experiences is also reflected in business performance. Although the sector experienced an overall decline in cash inflows (-5.6 per cent), activity-led businesses such as golf courses (2.5 per cent) and botanical and zoological gardens (6.1 per cent) saw cash flows rise last quarter, pointing to sustained demand for outdoor and fitness-focused activities.

Cost pressures drive divergence in business strategy

Close to six in 10 (57 per cent) H&L leaders have changed their business outlook for 2026 in light of current geopolitical instability. Against this backdrop, a clear divergence is emerging in how businesses respond to cost pressures.

• 33 per cent report rising staff costs following increases in the National Living Wage and National Insurance contributions
• 31 per cent feel pressure to increase prices for customers or to accept reduced profit margins as a result (30 per cent)
• SMEs are taking a more cautious stance, with borrowing down 12.7 per cent; while savings increased 1.9 per cent year-on-year in Q1 (rising to 4.3 per cent for travel agencies and 4.6 per cent for tour operators)
• Conversely, larger firms have increased borrowing by 3.2 per cent and drawn down savings -8.7 per cent, potentially signalling they are operationalising capital, while a 9.1 per cent growth in loan volumes suggests confidence to invest

Rich Robinson, Head of Hospitality & Leisure at Barclays, said: “Hospitality and leisure businesses are showing real resilience as they navigate higher costs and ongoing uncertainty. Our research shows many are responding by investing in the customer experience, using technology to build loyalty, and adapting their offering to meet changing expectations.

“While consumers remain selective with their spending, the appetite for memorable, high-quality experiences is clearly holding up. That presents a strong opportunity for businesses that can combine value, personalisation and operational efficiency to stand out and grow.”

Notes to editors

For more information please contact: louise.stoddart@barclays.com

Proprietary client data is taken from the Barclays Business Prosperity Index. Proprietary data is weighted by company size to represent the UK business population, with the top five percent of all metrics values removed, to best reflect the typical behaviour of the average business.

Business survey data was conducted among 500 H&L decision-makers between 17th April 2026 to 6th May 2026, by Opinium on behalf of Barclays. Businesses referenced in the research include those operating in the Hospitality & Leisure sector, including bars, restaurants, cinemas, travel agencies, golf courses, health and fitness clubs).

The Barclays consumer research was carried out between 8th-12th May by Opinium Research on behalf of Barclays. There were 2,000 respondents in each round of research, providing a representative sample of UK consumers by age, gender, region, and income group.

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