Data from the group shows there was a 6% rise in frequency of visits to the on-trade at the beginning of 2023 versus the timing of the Covid Omicron variant in 2022 but as interest rates have risen to 4% (February 2023), 4.25% (March 2023), 4.5% (May 2023) and to 5% in June, the percentage change versus 2022 has now dropped to minus 2%.
Some 2m households came off fixed rate mortgages in Jun this year, 2.8m are due to come off in December 2023 and a further 4.4m in December 2024 so “it’s no surprise to see cash strapped consumers are visiting venues less”.
Market intelligence business the Oxford Partnership explained the Bank of England has hiked interest rates 13 times since December 2021, with the base rate currently 5% – the highest since 2008.
Decline in trading outlets
As interest rates continue to rise, the group is seeing the impact for hospitality businesses growing through the decline in the number of trading outlets as credit becomes increasingly more expensive and its findings suggest this has accelerated the decline by -1% versus 2022.
“Rising interest rates will compound debt for many outlets, on top of the energy cost pain, unprecedented inflation, higher wages and labour shortage,” the expert said. “All contributing to inflict further economic pain on venues and the consumer.”
It also found consumers are also staying in venues for less time. Latest dwell times show consumer visit duration has dropped by 2.4% against 2022 figures.
Seasonality driving opening days
In response, the trade is either cutting days open or the number of hours open in a bid to optimise trading times. In June, outlets closed the number of days open by 0.5% on average but increased the hours they are open on trading days by 1%, driven by seasonality.
Interestingly, the outlets that are trading are delivering better results as they prioritise key trading days through the week, driving “more bang for their buck”, resulting in pints sold per hour climbing 7.9% in June 2023.
Oxford Partnership CEO Alison Jordan said: “Hospitality venues and consumers continue to face the toughest pressures but it’s encouraging to see there remains opportunity for venues that prioritise key trading occasions through the week.
“There are also some big sporting events coming up, including the FIFA Women’s World Cup and the Rugby World Cup, which the trade must look to capitalise on.”