Merlin Entertainment’s chief operating officer said the days of post-COVID “revenge spending” are over and businesses are having to find other ways to attract customers.
The term “revenge spending” was coined to describe people looking to spend the cash they’ve saved during the coronavirus pandemic on products and experiences that help them make up for time lost during lockdown.
Fiona Eastwood, chief operating officer of Merlin Entertainments, which owns Alton Towers, Legoland and the London Eye, told the Guardian that the company had seen changes in spending habits since last summer and had had to adapt some of its strategy to attract customers.
“What we saw during the COVID pandemic was what you might call revenge spending, and that has certainly dissipated,” she said.
“we [it] “Since mid-August last year, interest rates have had an impact on people’s wallets and have forced us to change direction. This is true not only for domestic trade, but also for trade from abroad and in almost all markets.”
Eastwood said the company, which owns 140 attractions in more than 20 countries, had to “pivot” from its previous ways of doing things as it emerged from the pandemic, including increasing promotions with newspapers and food brands and focusing on selling season passes.
She added that the company was seeing “signs of recovery” and had spent £90 million this year on capital investment in its UK operations, which include 29 attractions.
Eastwood’s comments came at UKHospitality’s summer conference, where the industry body called on the government to cut VAT in the sector from 20% to 12.5%.
UKHospitality said it would bring Britain’s VAT closer to that of other countries, create 85,000 new jobs and add £3.2 billion to the sector.
During the pandemic, VAT on tourism and hospitality sectors was reduced, first to 5% and then to 12.5%, before being restored to its current level in April 2022, to help businesses reopen after lockdown.
Brian Keely-Whiting, managing director of WH Pubs, said a VAT cut would be their biggest request to the new government.
Keeley Whiting, who runs four gastropubs in Sussex and Kent, said he believes current levels are “just wrong” and that pubs have to compete with supermarkets which don’t face the same problems.
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Philip Thorley of Thorley Taverns, which runs 18 pubs in Kent, said: “The UK pays the highest VAT in Europe and the hospitality sector deserves special treatment here because we employ a lot of people, we have a lot of new recruits and profit margins are being squeezed on all sides.”
The latest UKHospitality figures show that between 2021 and 2023, 22,859 businesses have closed in the UK hospitality sector, with just 11,734 opening.
“There’s energy costs, there’s labour costs and then there’s VAT,” said Mr Eastwood, who is also a UKHospitality executive.
“When we halved VAT during the coronavirus pandemic, we saw an immediate recovery for businesses.”
