The leisure and hospitality sector is extremely dynamic, with businesses heavily affected by uncontrollable external factors such as government policies and consumer trends.
In 2025, we saw employers’ National Insurance contributions and the National Minimum Wage (NMW) rise, placing increasing financial pressures on businesses. The sector has also been adapting to the boom in technology and AI, which consumers are increasingly expecting to use to enhance their customer experience – and this is only the beginning of this trend.
So, now we’re in 2026, what opportunities and challenges can we expect to see? And how can leisure and hospitality businesses prepare for these?
According to Hilton’s 2026 Trends Report, road trips are leading future travel plans for Brits, with 61% planning to drive to their destination of choice in the next 12 months. This is largely driven by the cost-saving appeal, but many also value the spontaneity, being able to pack more items and the convenience of having their own car.
This suggests that many people will be opting to holiday in the UK in 2026, rather than travelling abroad, which presents a great opportunity for leisure and hospitality businesses across the country.
But where there are opportunities, there are also challenges, and businesses will need to be ready for increased demand. Making sure you have the resources to deliver your services during busy periods is vital, whether that’s by hiring more team members or increasing stock reserves. If you haven’t already, look at your budgets and forecasts for 2026 to make sure you have the reserves to invest in the resources you’ll need to keep up with this expected increase in demand.
And don’t forget – competing businesses will also be taking advantage of this UK road trip trend, so put yourself ahead of the competition by diversifying your services and offering attractive incentives to customers. Whether it’s expanding your menu to offer regional dishes and drinks, or offering discounted rates for returning customers, having a strategy in place to draw customers in is key.
We will undoubtedly see more technology woven into the leisure and hospitality sector in 2026, including the use of AI. An increasing number of travellers are already using generative AI for planning and booking their trips, and major leisure and tourism brands like Expedia and Booking.com are integrating tools like ChatGPT – so it’s never been easier for a robot to plan your holiday for you.
In addition to this, the likes of online booking systems, digital check-in systems and apps that personalise guest experiences will only become more sophisticated in 2026, so leisure and hospitality businesses need to be on top of the latest tech to remain profitable.
But the rise of technology and AI doesn’t come without its complications and challenges. It has been behind a growing number of travel scams in recent times, so businesses need to ensure these tools are being used securely and that cybersecurity is a priority.
Some of the best ways to protect yourself are: set yourself a cybersecurity budget and invest in coverage that includes support for breach recovery; use multi-factor authentication wherever possible; update your software regularly; and train your team to spot scams. The more you can do to safeguard your business, the better.
The 2025 Autumn Budget saw the Chancellor announce a number of changes that will directly affect the leisure and hospitality sector this year.
One of the more positive outcomes is the reform to business rates, which are set to fall for smaller, customer-facing businesses from April. A new banded multiplier system will replace the current approach, meaning that leisure and hospitality businesses with physical premises open to the public are likely to see some relief.
But whilst businesses may be making cost savings when it comes to business rates, these newfound reserves are likely to be quickly spent elsewhere as a result of other Budget announcements. For example, the NMW and National Living Wage (NLW) will both be increasing in April, putting additional pressure on leisure and hospitality businesses – especially those that employ young people.
Those that sell alcohol and milk-based drinks are also set to be hit by increased alcohol duty and sugar tax. Alcohol duty rates will increase to 3.66% in line with inflation, while sugar tax is being extended to milk-based drinks, including pre-packaged coffees and milkshakes. Businesses affected by this will need to consider how they fund this increased tax bill – either taking the hit themselves or passing the burden onto customers by increasing the cost of these items.
With so many variables to consider for the year ahead, it’s never been more important for leisure and hospitality businesses to review their finances and ensure they’re well equipped for the year ahead.
Duncan & Toplis provides accounting and business services specifically designed to support businesses in this sector, including budgeting, forecasting, payroll and tax planning. To find out more, visit www.duncantoplis.co.uk.
