Hospitality operators fear the worst as recession is confirmed

Today's news that the UK economy is officially in recession will have confirmed the worst fears of hospitality operators, according to consultancy firm PricewaterhouseCoopers.

Gross domestic product fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter.

That means that the widely accepted definition of a recession - two consecutive quarters of falling economic growth - has been met.

Output in the hotel and catering sector declined by 2.4% in the final quarter of 2008, compared with a 2.1% drop in the previous three months, the figures revealed.

Liz Hall, head of hospitality & leisure research at PwC, said: "The UK love affair with eating out and staying in hotels has been put on hold - but for how long we do not know.

"While output declines for hospitality & leisure were less toxic than that of manufacturing, H&L businesses have had their worst fears confirmed today."

Personal and corporate belts have now been "severely tightened" and this has led to a significant reduction in revenues, Hall said.

"Of course, as in previous recessions demand will one day recover," she added. "However, we do not know how many cold, dark winters and long, wet summers lie ahead for UK pubs, restaurants and hotels before they play their part in an upturn."

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By Daniel Thomas

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