Hospitality Sector Index (HSI): Previous editions
Previous editions of our monthly Hospitality Sector Index (HSI) that provides a valuable indication of the changes occurring within the sector. For the recent edition, please click here.
Restaurants, pubs and bars – March 2026
Overall sector performance
- Hospitality sector treads water as February’s event led boost fades.
- Improved weather shift supports pubs seasonal growth, but wider growth remains elusive.
- Casual dining squeezed as households continue to pull back on discretionary spend.
- Labour costs remain the main margin lever, as revenue growth stays out of reach.
- Value perception remains critical as households stay cost-conscious.
Sub-sector performance
Fine dining
March followed a familiar seasonal slowdown for fine dining, with demand easing after the February trading period. Revenue fell 3.8% month on month, while labour hours declined by 2.1%, reflecting the limited flexibility operators have when maintaining service standards. The seasonal downturn was more pronounced than last year, when March revenue dipped by just 0.6%, pointing to a sharper pullback in discretionary spend in the current environment.
Despite this, year‑on‑year performance was resilient. Revenue grew 2.9% versus March 2025, while labour hours were 4.3% lower. This reflects the relative strength of high‑end, occasion‑led demand, allowing revenues to hold up without expanding operational scale. At the same time, tighter staffing control points to improved resource management across the segment.
Casual dining
Casual dining delivered a steady month on month result, with revenue rising 0.7% as labour hours fell slightly. This compares favourably with the same seasonal period last year, when March delivered only marginal revenue growth and rising labour input – suggesting improved short‑term operational discipline in the current cycle.
To remove the effect of seasonality it is essential to understand the year‑on‑year trends which show that like-for-like revenue fell sharply by 9.3% versus March 2025, a decline that is materially worse than other categories in the hospitality sector. This reflects the ongoing impact of the cost-of-living crisis, with discretionary, mid-market dining proving the most exposed as households prioritise essential spending. Labour hours were reduced broadly in line with sales, indicating swift reaction by operators, but also underlining how exposed casual dining has become during traditionally stable spring trading months.
Pubs & bars
March delivered a clear seasonal uplift for pubs and bars, with revenue up 8.1% on February 2026, supported by longer evenings and improving weather. Operators increased labour hours by 5.4%, leaning into demand rather than chasing efficiency alone. The seasonal revenue uplift was stronger than last year, when March revenue growth was closer to mid‑single digits but with tighter labour deployment.
Year on year, revenue rose 7.6%, reinforcing the segment’s resilience during a period that typically marks the early stages of the spring trading cycle. Unlike other segments, pubs and bars appear to have enjoyed a comparatively strong start to 2026, delivering inflation beating revenue growth.
Hotels – Febuary 2026*
*The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.
Hotel performance in February 2026 remained consistent with seasonal expectations, building on the typical early‑year recovery in business travel and conference activity post the January lull. Compared with last year – similar revenue growth required a much greater expansion in labour. The current performance points to improved operational efficiency and tighter workforce management.
On a year‑on‑year basis, revenue increased 1.6% while labour hours fell 3.7%, representing a more efficient performance than March 2025, when similar revenue growth required higher staffing levels. This suggests operators are managing labour costs more tightly, balancing modest demand growth with disciplined cost control to protect margins.
Restaurants, pubs and bars – February 2026
Our analysis
February 2026 vs prior month
After the seasonal slowdown experienced in January, the UK hospitality sector observed the expected rebound in February 2026. Like-for-like revenue climbed by 9.60% and hours worked increased by 4.99%, indicating a clear upturn in activity as the sector moved out of the January dip. This mirrors the pattern seen last year, when February 2025 delivered a notable recovery following January’s seasonal lull, recording an 8.10% increase in revenue and a 7.03% rise in hours worked on a like‑for‑like basis.
The Fine Dining upturn in February 2026 was strong, with revenue rising by 12.96% and hours worked up by 5.58%. This improvement demonstrates the expected seasonal shift in consumer behaviour, as customers return to higher‑end dining establishments after the post‑holiday slump in January. The expected increase in corporate entertaining and family gatherings also supported demand, further boosted by seasonal occasions such as Valentine’s Day and school half‑term holidays. Compared with February 2025, when revenue grew 11.40% and hours worked increased 10.19%, the 2026 figures show a more pronounced revenue increase but a more modest rise in hours worked. The results reflect the sector’s continuing need to focus on protecting real-term profitability margins in response to rising operating and labour costs and ongoing inflationary pressures.
The Casual Dining segment also grew in February, with revenue increasing by 11.50% and hours worked up 4.66%. This performance showcased the sector’s ability to reclaim momentum as consumers re-establish their normal eating-out routines. Operators have responded to this shift with measured staffing adjustments, increasing hours worked to support higher customer volumes while keeping labour costs under control. When compared with February 2025, which saw revenue increase by 11.22% and hours worked rise by 5.88%, the 2026 figures indicate performance broadly in line with last year.
The seasonal changes in the Pubs and Bars category are different from the restaurant trade; like-for-like revenue fell by 2.90%, accompanied by a 2.12% reduction in hours worked. Although Dry January ended, many consumers continued to moderate their alcohol intake, and the main seasonal occasions in February such as Valentine’s Day and the school half‑term tend to favour growth in food‑led sectors. In comparison to February 2025, which recorded a 1.20% decline in revenue and a 0.28% reduction in hours worked, 2026 sector performance has worsened. This deeper contraction reflects the compounding effect of consumers continuing to moderate consumption as persistent cost‑of‑living pressures reduce discretionary spend, and adverse weather limiting spontaneous pub visits.
February 2026 vs Febuary 2025
The UK hospitality sector recorded weak like-for-like performance change in February 2026, with revenue rising by 1.42% compared with the same month in 2025. Sector revenue growth has struggled to keep up with inflation as the trade continued to navigate typical early‑year demand patterns. More noteworthy is the 4.45% decline in hours worked, which indicates a continued, long term, industry‑wide emphasis on labour cost management. Operators appear to be adopting leaner staffing models to mitigate financial pressures and protect profit margins.
The Fine Dining segment observed notable year on year improvement in February 2026, with revenue rising by 6.48% compared with the same period in 2025. This points to a sustained demand within the luxury dining market, indicating that consumers continue to prioritise premium hospitality experiences despite wider economic pressures. Strong brand loyalty and a preference for high quality services have further reinforced this demand. Meanwhile, hours worked in the category declined by 3.73%, suggesting that operators have modified staffing models and streamlined operations to improve efficiency.
Casual Dining continues to face real challenges in February 2026; the category registered a 5.54% decline in revenue and a 5.32% reduction in hours worked compared to the prior year. While the results point to a continued shift in consumer behaviour, with households reducing discretionary spending on everyday dining, the segment is also being increasingly challenged by competition from lower‑cost formats. Fast‑food chains and delivery‑led brands seek to capture demand through convenience and value-driven pricing. As a result, operators have adjusted staffing levels to offset the weaker revenue performance. However, the scope for further labour adjustments must be limited, presenting an ominous outlook for Casual Dining sector.
While Pubs and Bars performance on a year‑on‑year comparison shows a better position, recording a 6.86% increase in revenue alongside a 2.71% decrease in hours worked relative to February 2025 (on a like-for-like basis). The variance between revenue growth and reduced labour hours points to a focus on operational productivity. This shift reflects evolving labour models in the segment, as businesses become more reliant on technology and streamlined service processes to maintain efficiency.
Hotels – January 2026*
*The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.
Our analysis
January 2026 vs prior month
In the Hotel sector, revenue in January 2026 fell sharply by 36.46% compared to December 2025 on a like‑for‑like basis. This decline reflects the typical post‑festive slowdown, with consumers reducing discretionary spending and domestic travel. Hours worked dropped by 7.99%, indicating a deliberate adjustment to staffing levels in response to lower guest volumes.
When this seasonality is compared with the changes seen January 2025, where revenue decreased by 34.76% and hours worked fell by 8.54%, the January 2026 figures remain broadly in line with expected seasonal trends.
Hotel operators are limited in their ability to reduce labour hours in direct proportion to revenue, as they must maintain core operational roles and service standards regardless of occupancy levels.
January 2026 vs January 2025
The Hotel segment reported a 1.65% decline in revenue and a 2.52% reduction in hours worked in January 2026 relative to the previous year.
While consumers may be slightly more cautious with spending in 2026, the shift is not large enough to signal a significant contraction in the Hotel industry. The reduction in labour hours suggests that operators are working hard to match labour with anticipated guest volumes, reinforcing a focus on maintaining operational efficiency.
Restaurants, pubs and bars – January 2026
Our analysis
January 2026 vs prior month
Following the seasonal highs in December, the UK hospitality sector experienced a sharp downturn in January 2026, with revenue dropping by 34.77% and hours worked falling by 17.96%. This seasonal retrenchment corresponds with the typical slump we would expect following the festive period and is in line with the seasonal dip experienced in January 2025 (which recorded a total revenue decline of 34.96% and a 17.02% reduction in hours worked on a like-for-like basis).
The predictable declines in footfall and social occasions and less favourable weather all contributed to reduced demand in January. The reduction in hours worked highlights the sector’s ability to adapt to seasonal fluctuations, with operators streamlining staffing models to manage variable costs during a traditionally challenging trading period.
The Fine Dining segment recorded a substantial contraction, as revenue declined by 34.10% and hours worked decreased by 17.00%. This movement reflects a post-Christmas shift in behaviour, as consumers pull back from spending on luxury dining experiences after the financially demanding festive season. Furthermore, the predictable slowdown in corporate events and family outings further contributed to the reduced demand. However, when comparing to the January 2025 seasonality swing, the decline is even more pronounced than last year which saw a 31.18% drop in revenue and a 19.44% fall in hours worked (on a like-for-like basis).
Casual Dining observed a 33.50% reduction in revenue, alongside a 18.73% decrease in hours worked. Again, the significant drop in revenue illustrates the decline in discretionary spending typically seen in January, as consumers scale back on dining out following the costly festive period. The reduction in hours worked highlights management’s efforts to align staffing levels with quieter trading conditions and fewer covers.
Pubs and Bars experienced the most dramatic seasonal decline, recording a 36.29% decrease in revenue alongside an 15.98% drop in hours worked compared to the prior month. This sharp fall is amplified by the sector’s exceptionally strong performance in December, when Christmas trading pushed revenues to their annual peak. The combination of coming down from those festive highs and challenging market conditions at the start of the year has intensified the downturn. The growing campaigns for additional support for Pubs and Bars should not fall on deaf ears, the seasonal drop from the heights at Christmas is even more pronounced this year: the seasonal swing last January saw like-for-like revenue decrease by 29.57% and hours worked reduced by 10.07%.
January 2026 vs January 2025
The pressures on the UK hospitality sector are evident in the contraction in January 2026 when compared to the same period in 2025, with revenue falling by 1.55% despite the inflationary pressure on prices seen across the economy. Operators faced a softer trading environment than expected for the post-Christmas period, as tighter discretionary spending habits were observed. A 4.99% reduction in hours worked highlights an industry wide emphasis on cost control, as businesses adopt more streamlined staffing models to limit the financial impact.
The Fine Dining segment continues to show greater resilience than the other areas within the sector, reporting a 2.97% increase in year-on-year revenue amid a 5.81% fall in hours worked relative to Jan 2025 data. The increase in revenue reflects continuing demand for premium dining establishments, suggesting that this segment continues to enjoy consumers remaining willing to spend for a high-quality experience. These operators continue to refine labour models, with the need to remain focussed on productivity and improving operational efficiency whilst seeking to maintain standards.
Casual Dining remains under extreme pressure, with the segment observing a 7.34% decline in revenue and a 5.24% decrease in hours worked (on a like-for-like basis vs January 2025). This performance underscores a continued shift in consumer spending habits, with many households cutting back on everyday dining experiences as discretionary budgets tighten. While operators have adjusted their staffing levels, the reduction in hours worked could not offset the fall in revenue. This illustrates how many Casual Dining businesses are struggling under financial pressures and are simply unable to find any further opportunities to make savings in their labour costs. Maintaining profitability amongst such a backdrop is simply not possible.
Pubs and Bars reported a sharp revenue increase of 7.31%, accompanied by only a 0.54% increase in hours worked (on a like-for-like basis) relative to January 2025. These figures offer perhaps some hope as revenue increases outpaced inflation. Part of this uplift may stem from widespread “support your local” campaigns, which appear to be resonating with consumers. In addition, many pubs have broadened their range of high-margin, low- or non-alcoholic options—such as low-percentage beers and alcohol-free wines—encouraging customers to choose these premium alternatives over traditional soft drinks. This shift in purchasing behaviour has supported revenue growth despite only marginal increases in labour hours. The very modest increase in labour hours indicates operators’ desire to manage costs and the disparity between revenue growth and labour hours growth provides an insight into the cautious approach operators are taking towards resource management.
Hotels – December 2025*
*The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.
Our analysis
December 2025 vs prior month
In the Hotel sector, comparing (on a like-for-like basis) December 2025 with November 2025, revenue increased only slightly by 0.52%. This is attributed to an uplift in bookings during the Christmas season crammed into what is realistically a shorter month. In contrast, hours worked decreased by 2.13%, suggesting that hotels continue to prioritise operational efficiency. Furthermore, this trend indicates a strategic shift towards leaner staffing models, as operators look to protect profitability.
December 2025 vs December 2024
When comparing December year-on-year data, the Hotel segment reported a 4.47% decline in revenue and a 5.67% reduction in hours worked. These figures suggest that UK Hotels are under pressure and the hitherto resilience in the sector is perhaps now strained. The decrease in hours worked highlights the prolonged focus on preserving profitability, as labour costs are clawed back to offset weaker revenue. Together, these trends outline a UK market where demand has softened, with operators responding with more disciplined staffing strategies.
Summary
Month-on-month summary
As expected, the UK hospitality sector observed a significant slowdown in January 2026 as trading naturally falls back following the busy festive season. Demand fell across the industry, influenced by tighter consumer discretionary spending and the annual shift toward healthier habits and reduced socialising. When compared with January 2025, the latest figures remain broadly consistent with the usual post‑Christmas patterns, although the data reveals some deviation in performance across the different categories within the sector and the Pubs and Bars felt the biggest seasonal slump following the highs in December.
Year-on-year summary
The hospitality sector remains under immense pressure. The sector declined in absolute terms over the 2025 year despite the stubborn inflation in the economy. Many consumers entered the New Year with more caution around discretionary spending suggesting that the broader economic pressures and uncertainty continues to affect consumer behaviour, reflected in the downturn in both casual dining and everyday leisure activities.
Operators continue to respond as best they can by managing labour costs, highlighting the understandably cautious stance being taken by operators. The adjustments suggest that the sector remains focused on minimising the damage to margin as far as possible through leaner staffing models, with an emphasis on operational efficiency across the sector. The year‑on‑year changes show the hospitality industry continues to suffer as consumers are forced to adapt their spending.
Restaurants, pubs and bars – December 2025
Our analysis
December 2025 vs prior month
In December 2025, restaurants, pubs and bars observed the anticipated seasonal growth compared to the prior month, as revenue soared by 30.00% and hours worked increased by 7.94%. The festive period boosted consumer demand for social gatherings and dining experiences, highlighting the industry’s dependency on a peak seasonal trading window and its impact on sustainable financial performance. The increase in hours worked reflects the operational requirement to manage higher footfall and maintain service standards during peak trading periods.
The Fine Dining segment showcased a substantial surge, achieving a 29.09% increase in revenue alongside a 9.24% increase in hours worked on a like-for-like basis. While this growth is primarily fuelled by seasonal demand, Fine Dining continued to outperform other areas of the hospitality sector, reflecting lower consumer price sensitivity within the segment. Consumers have demonstrated a clear ability to spend on high-quality dining experiences during the Christmas break. An increase in corporate events and social gatherings have played a key role in supporting this seasonal uplift, underscoring the segment’s capacity to capitalise on increased demand during peak season.
As expected, Pubs and Bars enjoy the strongest seasonal boost growth, recording a 43.01% increase in revenue alongside an 8.13% rise in hours worked relative top November 2025 (on a like-for-like basis). These figures outline the heightened demand during the festive period.
Casual Dining recorded a 22.03% uplift in revenue, accompanied by a 5.83% increase in hours worked. Revenue growth was driven by a mixture of competitive pricing strategies, seasonal menus and promotional offers, helping to attract value-driven customers seeking quality experiences without compromising on social engagement. However, Casual Dining continues to trail behind other segments in revenue growth, suggesting that further innovations will be vital to close the gap and sustaining long-term growth.
December 2025 vs December 2024
In real terms the restaurants, pubs and bars experienced a relatively flat like-for-like trading compared to 2024. Revenue for December 2025 compared to the same period in 2024 showed overall growth of 3.49% – broadly in line with inflation and therefore offering limited improvement in real term profitability – the experience varied significantly across subsectors. Meanwhile, a 0.47% reduction in hours worked across the sector underscores a strategic commitment to manage costs through improved operational efficiency.
Once again, the Fine Dining segment observed the strongest performance, as revenue increased by 15.50% alongside a 5.96% rise in hours worked. This indicates that luxury establishments are successfully meeting sustained consumer demand for premium experiences, while effectively managing operations and passing on inflationary cost increases. Even amongst the backdrop of an uncertain economic climate, the willingness for customers to consistently invest in quality dining emphasises the resilience of the demand in this segment.
Pubs and Bars experienced a slight revenue increase of 0.88% on a like-for-like basis, along with a 1.40% reduction in hours worked. Inflation continues to outpace the segment revenue growth, operators are having to find ways to reduce labour costs to reduce the impact on profit margins as they seek a financially sustainable position. Sadly, many operators are struggling to operate profitably.
Casual Dining continues to struggle in the current market conditions, reporting a 4.60% decline in like-for-like revenue and a 5.63% decrease in hours worked compared to December 2024. The significant impact of ongoing cost-of-living pressures, with customers being more cautious with their discretionary spending, has led to a lower demand for everyday dining experiences. To ensure long term sustainability, operators are refining their staffing models to align workforce levels with the falling demand.
Hotels – November 2025*
*The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.
Our analysis
November 2025 vs prior month
In the Hotel sector, comparing November 2025 with October 2025, like-for-like revenue increased sharply by 14.98%. This growth reflects a rise in demand for accommodation and related services during the lead up to the festive period. On the contrary, hours worked only increased 0.29%, suggesting that hotels sought to capitalise on additional demand without significantly expanding their workforce.
November 2025 vs November 2024
When comparing November year-on-year data, although Hotels achieved a slight revenue improvement of 0.46%, while experiencing a 3.58% fall in hours worked this means the sector has not been able to keep up with inflation. There is a clear focus across the segment on cost control, reflected in the heightened reduction in labour hours. These adjustments indicate the response to cost pressures and changing consumer behaviour, whereby maintaining service standards with limited resources has become a critical challenge for operators.
Summary
Month-on-month summary
In conclusion, as anticipated, operators needed to ensure labour costs were tightly managed during the festive period.
Year-on-year summary
In summary, hospitality performance was mixed during the festive period, with Fine Dining leading growth due to resilient demand for premium experiences. Pubs and Bars and Hotels saw revenue fall in real terms, whilst Casual Dining continued to struggle as cost-of-living pressures reduced consumer demand. The consistent reduction in labour hours across the troubled segments indicates a deliberate and sustained shift toward leaner operations. This strategic approach reflects an industry determined to find long-term sustainability and optimise resources. Operators face enormous challenges in the short-term while preserving service quality and the real impact has been felt by workers with fewer hours available.
Restaurants, pubs and bars – November 2025
Our analysis
November 2025 vs prior month
The UK hospitality industry showed marginal progress in November 2025, as revenue increased by 0.60% with a similar 0.52% rise in hours worked suggesting further productivity improvement opportunities are limited.
The Fine Dining segment demonstrated positive momentum, observing a like-for-like revenue uplift of 1.25% alongside a 1.38% increase in hours worked. This movement was driven by a heightened demand for premium dining experiences as the festive period starts, with corporate events and seasonal celebrations contributing to stronger performance.
The Pubs and Bars segment recorded a 3.89% increase in revenue (on a like-for-like basis), supported by an increase in seasonal social events. This significant revenue uplift was achieved with a 1.00% rise in hours worked, reflecting strong operational leverage and efficient management of labour.
In contrast, Casual Dining is feeling the pressure as the operators reported a 2.00% decline in revenue, along with a 0.38% rise in hours worked (on a like-for-like basis). This trend suggests a possible shift in consumer behaviour, with patrons either opting for more premium experiences, as seen in the Fine Dining sector’s growth, or choosing home-based celebrations, thereby squeezing the casual dining market.
November 2025 vs November 2024
The UK restaurant sector showed an upturn in revenue in November 2025 compared to the previous year, however the like-for-like increase of 2.73% is still noticeably lower than inflation for the same period. Whilst revenue trends varied between segments, a managerial focus on enhancing operational efficiency was evident through a consistent reduction in hours worked across the board. The data supports the anecdotal suggestions that the fears that these government led increases in wage inflation have resulted in reduced employment opportunities in the sector.
Pubs and Bars observed a like-for-like 2.23% revenue increase compared to the same month a year ago. This was achieved with a more significant 3.26% fall in hours worked indicating that operators are tightening their staffing models to reduce labour costs and maintain profitability.
Casual Dining has faced the most challenging conditions, experiencing a 4.84% like-for-like decline in revenue and an even steeper 7.05% decrease in labour hours. These figures illustrate the contemporary cost-of-living pressure facing the UK public, in which consumers are cutting discretionary spending on everyday dining experiences.
Fine Dining continues to outperform other categories, with an annual like-for-like uplift in revenue of 8.97% whilst also managing a 0.92% dip in hours worked. This suggests that these operators continue be streamlining operations and consumers demonstrate an ongoing willingness to opt for premium experiences and high-quality food, even in a challenging economic climate and operators have been able to pass on some of the inflationary pressures.
Hotels – October 2025*
*The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.
Our analysis
October 2025 vs prior month
In the Hotel sector, comparing October 2025 with September 2025 on a like-for-like basis, revenue grew significantly by 8.36%, while hours worked saw a slight decline of 0.13%. This pattern mirrors the broader trend observed across other segments during the same relative period. The sharp revenue increase can be attributed to an increased demand for leisure breaks, business conferences and seasonal bookings. The marginal reduction in labour hours suggests operators continue to maintain vigilant regarding cost control.
October 2025 vs October 2024
Based on October’s year-on-year data, Hotel’s observed a 1.37% increase in revenue. However, this was achieved with a 4.87% decrease in hours worked, also illustrating a conscious strategy by operators to improve operational efficiency in order to protect margins.
Summary
Month-on-month summary
In summary, these trends reflect the agility of the UK hospitality sector during the festive period. While premium and social experiences enjoyed growth in certain segments, other operators faced pressure from changing consumer behaviours. Labour hours have remained relatively stable over the period, suggesting that businesses are maintaining consistent staffing levels to manage seasonal pressures without incurring additional costs.
Year-on-year summary
In conclusion, the UK hospitality industry is actively adapting to changing consumer spending habits and rising operational costs. While revenue patterns differ, the consistent decline in labour hours across all segments paints a clear picture of an industry focused on productivity optimisation to ensure long-term profitability and short-term viability.
Restaurants, pubs and bars – October 2025
Our analysis
October 2025 vs prior month
In October 2025, the UK hospitality sector demonstrated positive momentum, influenced in part by seasonal changes. Casual Dining outperformed other segments, with service charge revenue up 12.30% and hours worked up 3.09%. These figures reflect the contemporary appeal of high-quality dining at an affordable price during times of economic pressure.
The Pubs and Bars segment saw service charge revenue grow by 2.66%, supported by sports events and seasonal promotions. Yet, hours worked fell by 2.38%. This suggests that businesses are continuing to strive for operational efficiencies, implementing tighter staffing models to offset rising labour costs.
October 2025 vs October 2024
Fine Dining experienced a slight decline, with revenue down 0.30% and hours worked down 0.28%. Given the inflationary effect, this suggests consumers are prioritising more affordable options, as the increased economic pressures placed on the UK public has caused a reduction in discretionary spending on premium experiences.
Casual Dining observed a 0.21% increase in revenue, which is less than inflation. Hours worked fell by 7.38%, suggesting businesses have streamlined operations to offset rising labour costs over the past year.
Pubs & Bars segment showed an increase of 4.34% in revenue, combatting the inflationary pressures while hours worked declined by 7.55%. This efficiency drive highlights the focus on maintaining profitability during a time of economic uncertainty.
In summary, while some segments reported marginal revenue increases from October 2024, the actual growth of UK hospitality remains negative, as inflation continues to rise and erode any real-term gains. A shift in consumer behaviour has certainly been observed, with more affordable dining being in higher demand, while businesses continue to make operational adjustments to reduce labour costs.
Hotels – September 2025*
*The hotel data reflects a period one month earlier than the restaurant data due to an industry reporting lag.
Our analysis
September 2025 to last month indicates a 0.78% revenue increase and a 3.57% rise in hours worked, driven by late-summer travel and a recovery in corporate bookings.
In the Hotel sector, comparing September year-on-year, revenue grew 2.72%, while hours worked fell 1.71%. While the revenue gains illustrated are at first sight encouraging, in real terms after factoring inflation it is clear that the sector continues to face pressures.
The September 2025 Index: 97.3
An index above 100 indicates improved productivity compared with the previous month; below 100 shows a decline.
Our analysis
Revenue for September declined by 5.44%, marking a notable dip in trading performance. In London, this downturn was significantly influenced by a week-long series of Tube strikes, which led to a sharp reduction in footfall. However, the impact extends beyond transport disruptions.
Across the UK, the broader economic environment continues to weigh heavily on consumer behaviour. Persistent cost of living pressures, coupled with growing concerns about potential tax increases in the upcoming November Budget, appear to be prompting consumers to tighten discretionary spending. This cautious approach is reflected in reduced customer volumes and lower average transaction values.
In response to the revenue shortfall, operators took steps to manage costs by reducing worked hours by 2.85%. While this demonstrates a proactive approach to labour cost control, it was insufficient to fully offset the decline in income. The figures suggest that businesses are navigating a challenging landscape, balancing operational efficiency with the need to maintain service levels and customer experience.
The August 2025 Index: 94.4
An index above 100 indicates improved productivity compared with the previous month; below 100 shows a decline.
Our analysis
The August Hospitality Sector Index, comparing August to July performance, shows how difficult the current market is within the sector. Seasonality is always a challenge, but August 2025 has proved to be a very difficult month as the sector suffered a 9.12% decline in like-for-like revenues relative to July.
Numerous high profile closures demonstrate the severity of the pressures being felt across the sector. The Hospitality Index in prior months demonstrated that businesses had been working hard to find productivity gains to combat the impact of the changes to the Employer’s National Insurance contribution, National Minimum Wage and inflationary pressure but those efficiency gains could only continue so far; August data suggest that further productivity improvements have proved elusive and the Hospitality Sector Index stands at 94.4 relative to July as hours worked in the sector fell (3.71%) at a slower rate than the decline in revenue (9.12%).
The fine dining segment of the market had been holding up well in prior months, but it has been the hardest hit in August as it suffered a 12.08% fall in revenue. This sharp decline underscores the mounting pressures facing the sector, marking August as a particularly challenging month.
The July 2025 Index: 107.2
An index above 100 indicates improved productivity compared with the previous month; below 100 shows a decline.
Our analysis
The July data paints a cautiously optimistic picture for the improved productivity in the hospitality sector, with the Hospitality Index rising to 107.2 reflecting an increase in revenues in the sector whilst the overall hours worked remained relatively static.
The uplift in service charge revenue reflects the seasonal changes that would be expected combined with inflationary effect, rather than significantly stronger consumer engagement and spending. The continued spell of good weather in July boosted results. Additionally, an uptick in events and social activity, coinciding with the start of the summer holidays, has contributed to increased footfall, especially in urban and tourist-heavy areas like London.
Interestingly, while hotels saw the largest increase in revenues (+12.59%), their hours only rose by 1.44%, reinforcing the trend of margin-focused operations. Employers appear to be actively managing headcount and hours worked due to ongoing cost pressures.
“We’re seeing venues do more with less, maximising revenue without a proportional increase in staffing. It’s a sign of resilience, but also a reminder that the sector is still navigating a delicate balance between growth and caution,” said Peter Davies, Hospitality Partner.
The fine dining segment continues to perform well, with a 7.93% increase in service charge, despite a slight dip in hours worked (-0.68%). This could indicate higher spend per guest or improved operational efficiency. Meanwhile, pubs and bars saw a modest decline in funds (-1.17%), though hours increased slightly, suggesting a shift in consumer behaviour or pricing strategy.
Overall, July’s figures suggest that the sector is benefiting from seasonal tailwinds but the static labour metrics continue to illustrate a more conservative approach to staffing and long-term investment.
The June 2025 Index: 102.1
An index above 100 indicates improved productivity compared with the previous month; below 100 shows a decline.
Our analysis
Based on June data, the month’s Hospitality Sector Index (HSI) is a positive index of 102.1 showing the sector continues to work hard to increase productivity in response to growing employment costs.
Key findings
- Relative to May, the like-for-like revenues in June increased by 4.48%. There would be a seasonal uplift expected at this time of year which would improve like-for-like revenues, but is notable that the fine dining sector continues to be outperforming other parts of the sector.
- The hotel sector has only enjoyed a 2.12% increase in revenues relative to May.
- There was only a modest 2.31% increase in hours worked despite the extra seasonal demand, illustrating the continuing caution hospitality businesses are exercising in respect of managing employment costs, notably in pubs and bars where the hours worked actually decreased by 0.46% relative to the prior month.
Peter Davies, Partner and Head of Troncmaster Services at Moore Kingston Smith, said:
“The wonderful weather has helped tremendously and provided a much-needed seasonal boost which has enabled the sector to benefit from revenue increases and therefore continue to improve productivity.
Revenues across fine dining have remained encouraging but the hotel sector improvement is notably modest relative to the rest of the sector – probably a consequence of increased price sensitivity dampening demand and lower levels of international travel which is affecting London in particular. A 2.12% increase in hotel revenue was offset with a 3.12% increase in hours worked, showing a decline in productivity within that category suggesting a lower guest spend per head.
Pubs and Bars particularly benefited from the warm and dry weather seeing a 3.84% increase in revenues in the month, delivered with fewer worked hours suggesting it was a combination of higher spend per head or inflationary price increases that drove the month-on-month revenue improvement.
As we move into the high summer period with key events in July such as Wimbledon and high-profile pop concerts in major cities, it will be fascinating to see if there is a noticeable improvement in the sector next month.”
The May 2025 Index: 100.8
An index above 100 indicates improved productivity compared with the previous month; below 100 shows a decline.
Our analysis
The May Hospitality Sector Index paints a challenging picture for the industry. Despite seasonal factors that typically boost performance, such as bank holidays and favourable weather, revenues have remained flat. This has forced operators to focus on productivity gains and cost control to maintain stability.
Key findings
- The Index stands at 100.8, indicating marginal growth driven by productivity improvements rather than revenue gains.
- Revenues declined by 0.18%, despite seasonal expectations for growth.
- Worked hours fell by 0.99%, reflecting efforts to offset rising employment costs.
Despite the slight decline in revenue, the sector has managed to stay in positive territory due to a reduction in hours worked. This suggests that businesses are actively managing staffing levels to counteract the impact of April’s increases in employer National Insurance and the National Minimum Wage.
Casual dining, pubs and bars have seen a downturn in revenue, possibly indicating a tightening of consumer discretionary spending. In contrast, hotels and fine dining experienced modest revenue growth, but this was accompanied by a notable drop in worked hours, over 3% in fine dining, highlighting a continued emphasis on efficiency.
These trends align with recent reports showing that over 100,000 jobs have been lost since the National Insurance hikes took effect, and hospitality sector vacancies have dropped by more than 3,000 in the three months ending May. This month is the final full month before the summer holiday season so is critical for many businesses in the sector.
The April 2025 Index: 105.9
An index above 100 indicates improved productivity compared with the previous month; below 100 shows a decline.
Our analysis
Based on April data, the HSI is a positive index of 105.9. This suggests the sector has boosted productivity in response to growing employment costs.
Key findings:
- Like-for-like revenues went up by 5.66%, primarily as a result of the Easter weekend boost. Hospitality businesses have also been increasing prices to cope with inflationary pressures, including the impact of higher employment costs in April.
- There was a marginal 0.26% decrease in hours worked despite the extra demand of the Easter weekend, illustrating the caution hospitality businesses are exercising due to rising employment costs.
Peter Davies, Partner and Head of Troncmaster Services at Moore Kingston Smith, said: “While the boost of the Easter weekend did much to mask or delay any immediate downturn following employer National Insurance and national minimum wage increases, there may still be trouble ahead.
“Revenues across casual dining remained stable with small increases for pubs and bars, with the combination of the Easter holidays and unseasonably fine weather likely drivers.
“The hotel sector has begun to recover from a slower than expected start to 2025, with international inbound travel, particularly from the US, lower than anticipated.
“Businesses had to make tough choices across February and March to prepare for rising costs in April, including recruitment freezes, and coping with demand by increasing full time staff hours while cutting back on part time workers, which the National Insurance rises have hit the hardest.
“A 6.19% increase in fine dining revenue was achieved with just a 1.91% increase in hours worked, showing improved efficiency, productivity and guest spend.”
How we can help
For more information about the Hospitality Sector Index, TroncBox or our solutions to the hospitality sector, please contact one of the team.
How we collect the data
The Moore Kingston Smith Hospitality Sector Index compares changes in revenues and hours worked relative to the prior month. The data for the Index is gathered by WMT Troncmaster Services Limited, part of Moore Kingston Smith, which manages tronc allocations for circa 315 hospitality businesses operating across nearly 900 sites. The data is extracted from our proprietary software, TroncBox, used for the majority of these tronc allocations.
The index offers a broad indication of productivity changes on a month-by-month basis, where an index above 100 indicates improved productivity and below 100 indicates a decline.
The use of tronc allocation information provides a valid data source following the introduction of the Employment (Allocation of Tips) Act on 1 October 2024, which requires 100% of service charge (and tips) to be distributed among all employees without deductions no later than the end of the month following its receipt. Typically, restaurants, pubs and bars distribute tips and service charge at the end of the same month the gratuity is received, however given the nature of the business and the regular use of agency workers, it is commonplace for hotels to make these distributions to workers in arrears which means there is an inherent lag in the hotel sector data.
Published monthly, each Hospitality Sector Index will build on earlier editions to track performance over time, with year-on-year analysis available from October 2025.
