Hospitality Sector Still Suffering as R&D Spending Falls 21%

Research & Development spending in the hospitality industry fell 21% in the first quarter of the year — underlining the stress the sector is still under, the latest ONS data analysed by innovation funding specialist Catax1 shows.

The ONS published its Q1 2022 statistics for R&D spending on Thursday. Spending on R&D is vital to the UK economy because it helps firms compete for market share, revenue, foreign investment and creates skilled jobs.

The accommodation and food service sector spent £15m on R&D in Q1 2022, down 21.1% from £19million in the previous quarter (Q4 2021). It is the first time hospitality spend on R&D has fallen in a quarter since Q1 2020.

It was also a decline of 6.3% from the £16m invested in the same period last year (Q1 2021).

The hospitality sector’s performance was significantly worse than the performance of UK industry as a whole. Total R&D spending by UK businesses rose 14.1% on an annual basis to £12bn in Q1 2022. This was a 13.9% quarterly increase.

By comparison, GDP in Q1 was up 8.7% on an annual basis according to the ONS2. The ONS R&D spending statistics don’t factor inflation, which was running at an annual 7% in March this year3.

Mark Tighe, CEO of innovation funding specialist Catax, comments:
“Supply chain issues and labour shortages are hitting the hospitality industry hard and providing a setback to its recovery. In fact, this is the first time R&D spending has fallen since the start of 2020 when the pandemic first struck.

“It’s a worrying sign for the sector, which by the end of last year had almost battled back to where it was pre-pandemic.

“The rising cost of oil and food may put further pressure on R&D spending in the quarters to come. The UK is suffering from a lot of imported inflation and the hospitality industry is vulnerable to that.”