By Melinda Roylett, Managing Director of Merchant Services at Lloyds Banking Group
It’s been a difficult few years for many businesses across the UK, with many still feeling the after-effects of the COVID-19 pandemic combined with a volatile economic environment. In the hospitality sector, many businesses have been struggling with thin profit margins – with 50 pubs a month closed in the first half of this year, and just 30% of night-time bars and clubs making a profit, this industry needs help to maximise their chances of survival.
Lloyds Bank Merchant Services handles card payments for 34,000 SMEs in the UK, along with supporting one million businesses with digital payment and banking services. As both an issuer and acquirer bank, that gives us the biggest transactional datasets of any bank in the UK. That includes exclusive data from hospitality merchant clients, and transactional data insights on how people are spending in bars, hotels and other hospitality venues.
Our data affirms some existing trends – but uncovers other surprising shifts that payment providers might sit up and take notice of.
- Overall hospitality spending this year is up 14% year-on-year compared to 2023, thanks in part to various high-profile sports events, a general election, a few hot spells – and of course the ‘Taylor Swift’ effect, with her tour which attracted hundreds of thousands of attendees to various venues across the UK, and generated massive uplifts in restaurant spending and hotel bookings for those local areas.
- On the day of the European Championships football final, transactions in pubs and restaurants increased by 35% in value and 63% in volume compared to the same day in 2023.
As inflation falls and with unemployment at a record low, people seem to be feeling more confident about their finances and appear willing to spend money for immersive and leisurely experiences. This may be part of a wider rebound in business confidence during 2024 as shown by Lloyds’ Business Barometer
Conversely, some events have kept people at home and impacted spending as a result. The coverage of the UK general election on Thursday 4th July continued overnight and into the early hours of the next day. Hospitality transaction value and volumes on Friday 5th July – the day after the election – were 7% lower than the average on Fridays in July 2023, possibly suggesting that people had stayed up late the night before watching the results.
A big shift, and one that merchants should pay closer attention to, is that Tuesday is fast becoming the new Friday, with a 16% uplift in spend on food and drink on Tuesdays year-on-year. While weekends have traditionally been the time to shop and socialise, the shift towards remote working over the last few years means that more of this spend is happening earlier in the week, a big change from pre-pandemic spending patterns.
By far the biggest stand-out finding from our recent data is that the biggest increase in spend across food and drink in the hospitality sector is among the over-60s. As valuable as youth spend is to the hospitality sector, merchants also need to tailor their offerings to older age brackets who mostly have more disposable income to play with.
How the payment industry can help hospitality merchants to survive and thrive
As new technology emerges, and payment habits evolve, finding efficiencies when margins are tight and customers are increasingly cost-conscious can really make a difference to growth and how successful a hospitality business becomes.
The key to unlocking those efficiencies is data. For merchants inexperienced with payments, being able to access data easily, analyse and understand what it means for their business can still be a challenge.
In partnership with expert payment providers, hospitality merchants can transform payments from mere functional transactions into multi-faceted opportunities to add value, build new revenue streams, and strengthen merchant cashflow and liquidity.
A prime example is the King’s Head pub in Norfolk, UK, which handles frequent daily transactions, particularly during high-volume periods. With Lloyds Bank Merchant Services, not only were the licensees able to provide a quick payment service to their customers, they also saved around £6,000 in service and transaction fees over a one-year period compared to their previous provider.
By integrating POS acceptance devices with services like stock and inventory management, customer relationship management and cashflow tools, hospitality merchants can not only offer exceptional customer service that deepens loyalty, but also be adaptable to future customer preferences and new payment methods as they emerge.
