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The Guardian - UK
The Guardian - UK
Business
Jack Simpson

UK attractions try to win back visitors as post-Covid ‘revenge spending’ ends

A woman with a buggy takes a photo of her young daughter on a bench next to a lifesize lego family
During the pandemic, VAT on tourist attractions and hospitality was cut to support the reopening of businesses after lockdowns. Photograph: Greg Balfour Evans/Alamy

The period of post-Covid “revenge spending” has ended, leaving businesses having to look at different ways to attract customers, the chief operating officer of Merlin Entertainments has said.

The term revenge spending was coined to describe how people looked to splash the cash they had saved up during the Covid pandemic on products or experiences that would help make up for time lost to lockdowns.

Fiona Eastwood, the COO of Merlin Entertainments, which owns Alton Towers, Legoland and the London Eye, told the Guardian that the business had seen a change in spending habits since last summer, and had had to alter some of its tactics to continue to bring in customers.

“What we saw coming out of Covid, was what was termed revenge spending, and that has definitely gone away,” she said.

“We saw [it] from the middle of August last year, with the impact of interest rates, impacting on what people had in their pockets, and we have had to pivot, and that is as much about domestic, as inbound trade, and across pretty much every market.”

Eastwood said that the business, which owns 140 attractions in more than 20 countries, had had to “pivot” from what it was doing coming out of Covid, by putting on more promotions with newspapers and food brands, and increasing its focus on selling season passes.

She added that the company was seeing “green shoots of recovery” and had spent £90m this year on capital investments in its UK businesses, which include 29 attractions.

Eastwood’s comments came during UKHospitality’s summer conference, at which the trade body called for the government to reduce VAT for the sector from 20% to 12.5%.

UKHospitality said this would put VAT in the UK closer to that in other countries, and would create 85,000 new jobs and add £3.2bn to the sector.

During the pandemic, VAT on tourist attractions and hospitality was cut to support the reopening of businesses after lockdowns, first to 5% and then 12.5%, before returning to its current level in April 2022.

Brian Keeley-Whiting, the managing director of WH Pubs, said a VAT cut would be his top ask of any incoming government.

Keeley-Whiting, who owns four gastro pubs in Sussex and Kent, said that he thought the current level was “really wrong” and that pubs were having to contend with supermarkets that were not facing the same challenges.

Philip Thorley, whose business Thorley Taverns owns 18 pubs across Kent, said: “We pay the highest VAT in Europe, we should have a special case for hospitality in the UK because we employ a lot of people and a lot of people at entry level, and our margins are being squeezed every which way.”

The latest UKHospitality figures show that between 2021 and 2023, 22,859 businesses in the UK hospitality sector closed, while 11,734 opened.

Eastwood, who is also a UKHospitality board member, said: “There is the cost of energy, the cost of labour and the VAT. When we reduced VAT to half during Covid, we saw an immediate bounce back for businesses.”

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