Hospitality and leisure SMEs anticipate 21 percent revenue increase as restrictions continue to ease

  • SMEs are now more optimistic than pre-pandemic, predicting a 9.8 percent increase in revenue this quarter compared to Q1 2021 – jumping to 21 percent for the hospitality and leisure sector
  • 85 percent of SMEs are planning to invest over the next 12 months by adding staff, new equipment or technology, and ramping up their marketing
  • As restrictions continue to ease, restaurants, pubs and bars expect to busy, with a quarter of hospitality and leisure SMEs anticipating high demand
  • Brits heading out will need to be organised: hospitality and leisure venues expect customers will need book at least five days in advance to secure a reservation

With lockdown restrictions continuing to ease across the UK, new research from Barclaycard Payments finds that SMEs predict a 9.8 percent rise in revenue this quarter compared to Q1 2021 – marking the highest anticipated increase since the SME Barometer was launched in February 2020.

The research, which polled over 670 senior staff working in UK SMEs, also shows business sentiment is starting to look more positive, at 110 points out of a possible 200**. This is up from a low of just 79 points in Q2 2020, and means SMEs are back to the same pre-pandemic sentiment levels of 110 last seen in February 2020.

85 percent of SMEs plan to invest in their businesses over the next 12 months, mainly by recruiting staff, investing in new equipment or technology, and upping marketing efforts. After a tough year for many jobseekers, a reassuring 47 percent of SMEs also expect to increase their staff over the next year.

Over half (51 percent) of SMEs expect an increase in revenues from 17th May, when the next stage of restrictions will be lifted. This is supported by Barclaycard Payment’s acquiring data, which shows that hospitality and leisure SMEs saw the number of payments processed up 105 percent in the last week of April, compared to the first week, following outdoor hospitality venues opening from the 12th April***.

Looking ahead, SMEs are forecasting an 18 percent increase in revenues a year from now, with the hospitality and leisure sector expecting a 42 percent boost. Many SMEs have an optimistic (33 percent) or neutral (40 percent) outlook for the UK economy, which increases to 51 percent optimistic and 36 percent neutral about the prospects for their own businesses.

Customers must book ahead to secure a bookings

Over a quarter (29 percent) of hospitality and leisure SMEs expect to see higher demand between now and 21st June, when most restrictions are expected to be lifted, compared to pre-covid. This is due to customers being less likely to go abroad (79 percent), pent up demand after months of lockdown (66 percent), and visits to hospitality venues to meet up with family and friends (65 percent).

Hospitality and leisure venues taking reservations are currently booked at half (49 percent) of their capacity, with more than a third (35 percent) expecting customers will need to book at least five days in advance to secure a reservation for mid-June.

Summer remains challenging

Despite signs of optimism, potential challenges remain for the coming months. Of those who expect lower demand between now and 21st June compared to pre-Covid, many (37 percent) expect, after an initial burst, customers will hold back their spending until 21st June. Others are concerned that people now prefer to socialise and eat at home (33 percent) or will tire of social distancing measures (34 percent).

However, hospitality and leisure SMEs are prepared for customers once they fully open back up, and have invested in free hand sanitiser (65 percent), signs to remind customers about social distancing rules (61 percent), PPE for all their staff (53 percent) and training new staff or those returning from furlough (38 percent) ahead of May re-openings when most indoor restrictions lift.

Hospitality and leisure SMEs are also looking at ways to increase revenues after a difficult year including increasing prices (21 percent) and investing in improving outdoor spaces (16 percent). 

Rob Cameron, CEO of Barclaycard Payments, said: “As restrictions lift, it’s reassuring to see the highest level of SME optimism since the SME Barometer launched, with expectations of a long overdue boost for the hospitality and leisure sector. With the confidence to plan ahead, small businesses have turned their attention to bulking up their workforce, as well as investing in technology and marketing. We’re looking forward to seeing this confidence translate into sales, and we continue to support small businesses as they further increase their stronghold in the UK economy.”

Kate Hardcastle MBE, independent expert, said: “Speaking to small business owners, while they’re excited to be back in action, there’s a natural cautiousness about interest dropping off after an initial burst of spending. However, the overarching feeling is one of hopefulness for the year ahead – and with that, a drive to invest in their business and people. What they need now is our support. As we hit the summer months, I would encourage us to all do our bit to help our local SMEs and support their recovery.”

*Hospitality and leisure SMEs include a range of businesses including pubs, restaurants, spas, gyms, theme parks, leisure centres and sports clubs.

**To measure SME sentiment, Barclaycard and YouGov have aggregated SMEs’ viewpoints on 10 key topics to create an overall index score out of 200, with anything over 100 indicating a positive outlook, while anything under 100 is negative. The breakdown of key topics is below, including the change in sentiment score for each category from the Q1 2021 Barometer.

***Taken from ‘all food & drink’ category which contains Restaurants, Fast Food, Pubs & Bars, which have seen an increase of 104.7% in week 17 (w/c 5th April) compared to week 14 (w/c 26th April).

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