Hotels defy consumer spending decline in December

Consumer spending continued to fall in the month of December with a 1% decline, however hotels managed to defy the trend – with spending having increased by 7.6%.

This is according to Visa’s UK Consumer Spending Index, which showed that overall expenditure declined 1% year-on-year in December – the fastest decline seen since April.

However hotels and restaurants outperformed other UK sectors in December, and experienced the joint-quickest rate of increase in the past 20 months.  

For the whole of 2018 Visa’s index found expenditure has fallen in eight months of the year, underscoring “a relatively weak overall picture of household spending”. Lower expenditure was largely driven by a disappointing performance by the high street, as ‘face-to-face’ spending fell -1.6% on an annual basis in December.

Visa also found that online spending remained “relatively subdued”, with expenditure rising by just 0.5% year-on-year.

Adolfo Laurenti, European principal economist at Visa, said: “The further decline in UK consumer spending in December 2018 is a disappointment, but not a surprise. Notwithstanding a backdrop of low unemployment and rising wages, households remained very cautious at the end of the year – as they were for most of 2018.

“An acceleration in spending at hotels, restaurants and bars (+7.6% year-on-year) suggests that some categories of discretionary spending are holding up better than the market as a whole. And the modest pickup in ecommerce point to the resilience of digital channels of distribution, a favorable long-term trend that recent woes have not derailed.”