Hospitality Sector Index - February

Moore Kingston Smith's latest Hospitality Sector Index report demonstrates that in February the sector saw the usual rebound from January’s seasonal dip, with like‑for‑like revenue up 9.6% month on month. This reflects consumers returning to more typical patterns after a softer start to the year.

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 February 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.

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.