How has the Recession Affected the Hospitality Industry?

Recession - “A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters. A recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market” (InvestorWords.com, 2009).

The recession in Britain officially started in the second quarter of 2008, some one and a half years ago. The recession indicates a slow-down in economic activity as a result of less money being spent, and more jobs being lost due to the money not being spent to keep employees in the job, and due to the increased unemployment, less money can be spent, this causes a cycle, which can spiral downwards very quickly which drags the economy down with it. The Credit Crunch played a huge part in the recession; it caused a shortage in finance and disposable income, this along with inflation meant a loss of confidence in the financial sector.

Due to the shortage of disposable income, far less money is being spent in restaurants and bars, and this theory is backed up by a research firm named Mintel, where 2,000 consumers took part in the research, the research found that “66% said they would spend less on going out to restaurants because of the economic climate, while 59% said they are already cutting back on trips to the pub” (Thomas, D. 2009). But, although consumers are eating out less, bar and pub food is still of a relatively high demand. Research carried out by another company, named Buckingham Research, which was carried out on 600 consumers, has produced the data that within April of 2009 and April 2010, 75% of families within the UK will cut back, or stop going out to eat and drink (Kühn, K. 2009).

The hospitality industry seems to have been affected by the recession very negatively, but more research, undertaken by Barclays Local Business, has found that 64% of the 150 hotels and caterers used in this research said their business has become more efficient due to this recession, and 45% have also seen an improvement in their customer service. This may be due to more care being taken when making orders for stock, and being more careful with hours worked and numbers of staff on at any one time. Further more, 20% feel the recession hasn’t affected them at all (Thomas, D. 2009).

References

FinancialAdvice. (2009). When did the UK recession officially start to kick in? [Internet]. Available from: [Accessed: 23 November 2009].

Kühn, K. (2009). Recession prompts 75% of British families to eat at home. [Internet]. Available from: [Accessed: 23 November 2009].

Kühn, K. (2009). Restaurants suffer as slump hits Europe. [Internet]. Available from: [Accessed: 23 November 2009].

InvestorWords. (2009). Recession: Definition. [Internet]. Available from: [Accessed: 23 November 2009].

Thomas, D. (2009). Consumers avoiding pubs and restaurants as recession fears grow. [Internet]. Available from: [Accessed: 23 November 2009].

Thomas, D. (2009). Recession has made us more efficient, say small firms. [Internet]. Available from: [Accessed: 23 November 2009].