Hotel spending up 7.5% in February

Increased spending on hotels helped drive consumer spending in February, according to data released by Barclaycard.

Spending in hotels grew 7.5% compared with the same month last year, while restaurant and pub spending grew by 13.8% and 12.8%, respectively, as couples took advantage of Valentine’s Day falling on a Sunday by celebrating with meals out and weekend breaks.

Overall spending grew by 3.3% in the month, the second consecutive slowdown since year-on-year growth reached a peak of 4% in December last year. Barclaycard said this was due to uncertainty around the the economic environment, which hit consumers’ confidence and led them to reign back their spending.

The research found consumer confidence has fallen to its lowest level since Q3 2014, with confidence dropping sharply over the last three months.

Just over half of consumers (54%) now say they feel confident in their household finances, a significant drop from the seven-in-ten (71%) who said the same in December 2015. There was also a sharp decline in confidence in job security (from 52% to 39%) and in the UK economy, which has fallen from 45% to 36%.

As a result, Barclaycard said consumers are spending carefully on the experiences they won’t do without and holding back in other areas.

The firm said spending on hotels, restaurants and bars looks set to continue, with research suggesting that shoppers plan to spend on experiences in March. One in five (21%) said they’ll spend more on holidays, and one in ten (13%) will spend more on entertainment and days out.

Paul Lockstone, managing director, said: “February spend growth, while still robust at 3.3 %, continued the downward trajectory we’ve seen over the past few months as consumers reacted to uncertainty in the economy.

“The February half-term and the Valentine’s weekend provided bright spots, with spending on days out and trips away holding up well. This suggests shoppers are budgeting carefully so they can spend on their ‘must-have’ experiences.”