Key Note estimates that total consumer spending on leisure in the UK is worth just over £100bn in 2008 (excluding holidays and travel costs). Approximately 40% of this is spent within the home (e.g. on televisions, computers and reading materials). The higher proportion, around 60%, is spent on activities outside the home.
Leisure outside the home is an extremely diverse market, ranging across sport, culture and gambling-related activities. The largest sector values are generated by the sale of alcohol and restaurant meals. Drinking and eating account for nearly two-thirds of spending outside the home, ahead of gambling, on which consumers spend around £10bn a year. However, in a complex market pattern, playing the National Lottery (the leading gambling activity) helps to fund and subsidise many of the healthy or cultural pursuits that preoccupy consumers. The National Lottery benefits a variety of leisure activities, including swimming in local-authority leisure centres and attending the opera or ballet.
The presence of alcohol and gambling in the leisure market means that regulation is ever-present. The current decade has brought comprehensive reform and modernisation of outdated laws on alcohol licensing and gambling, as well as a complete ban on smoking in public premises (a law that represented a sea change for many pubs and restaurants). The Government’s decision to ban smoking in enclosed public places fits in with growing health‑consciousness on the part of consumers, many of whom have drifted away from competitive sports towards less complicated fitness activities, such as walking, swimming or jogging.
The companies coping with these regulatory changes are now mainly specialists in niche leisure markets, as opposed to the massive conglomerates that operated in the 1990s. Leading examples of these — maintaining brand names familiar to the UK consumer over decades — include: Odeon Cinemas, Ladbrokes (gambling), Virgin Active (health clubs), and Beefeater (restaurants). Many of the leading leisure brands are now backed by private equity, rather than being publicly quoted.
In contrast to the media-dominated in-home leisure market, where multinational companies are all-powerful, these markets remain predominantly national, even parochial, in character. Examples of traditional favourites are widespread and include eating out (traditional pubs), bingo clubs, cricket, bowls and the West End theatre. The international influence is strongest in the cinema, where the Hollywood giants still rule, and in restaurants, featuring US brands such as Pizza Hut and McDonald’s.
With the UK heading for a recession in 2008 and beyond, the prospects for leisure spending outside the home are poor for the rest of the decade. Key Note is predicting low growth (under 10%) over the next 5 years, although the sector will be held back by declines in some key markets, notably the massive alcoholic-drinks market. Eating out should continue to prosper, as should live entertainment (including spectator sport, with its London 2012 Olympics dividend). Being able to ‘search and book’ events using home computers is itself providing a boost to demand for live entertainment, underpinning a general, growing desire to escape from ‘cocooning’ within the home during leisure time.
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