Industries with the Biggest Increase in Profit Margin in the UK in 2023

1. Urban Passenger Rail Operations in the UK

Percentage Point Increase for 2023: 188.1pp

Over the five years through 2022-23, revenue is expected to contract at a compound annual rate of 1.7% to £3.7 billion. COVID-19 disruptions decimated urban rail traffic, driving this revenue loss. London is the largest market for urban rail services, accounting for more than 90% of passengers. Consequently, Transport for London (TfL) dominates the industry through its ownership of the London Underground, the Docklands Light Railway and the London Overground. Industry performance is predominately contingent on the number of passengers using these services, which is determined by several demographic and social factors, including the size of the urban population, the... Learn More

2. Scheduled Passenger Air Transport in the UK

Percentage Point Increase for 2023: 77.1pp

Over the five years through 2023-24, scheduled passenger air transport revenue is anticipated to contract at a compound annual rate of 3.6% to £24.1 billion. The COVID-19 outbreak has had a devastating effect on airlines. Strict public health restrictions significantly cut demand for air travel during the first quarter of 2020-21. Despite showing signs of recovery during the second quarter of 2020-21 with the easing of travel restrictions, the re-implementation of domestic and international restrictions spurred a renewed slump in passenger numbers in the latter half of 2020-21.

Although passenger numbers remain fairly robust during weak economic conditions, changes in consumers'... Learn More

3. Casinos in the UK

Percentage Point Increase for 2023: 60.7pp

Companies that own and operate casinos offer various gambling activities, including card games, slot machines and roulette tables. Casino companies also generate revenue from amenities like food, drink and accommodation. Before the COVID-19 outbreak, the industry was already subject to intense competition from online casino offerings. According to the Gambling Commission, remote casinos' gross gambling yield was 217.6% higher than bricks-and-mortar casinos in 2019-20. This competition contributed to revenue declining over the two years through 2019-20. Stringent COVID-19 restrictions resulted in an 88.4% plunge in revenue over 2020-21, making the casino industry among the worst impacted by the pandemic.

Over the... Learn More

4. Budget Airlines in the UK

Percentage Point Increase for 2023: 35.3pp

The Budget Airlines industry has benefitted from consumers increasingly seeking value for money. The industry is highly concentrated, consisting of only four airlines. External factors, including business and consumer confidence, household disposable income, and outbound and international tourist numbers, determine demand for budget airlines. Shocks like natural disasters, terrorist attacks and disease outbreaks also affect demand. Revenue is expected to rise at a compound annual rate of 0.3% over the five years through 2023-24 to £10.1 billion.

Before the COVID-19 outbreak, subdued confidence and weak growth in household disposable income due to Brexit supported demand for budget airlines' services from... Learn More

5. Airports in the UK

Percentage Point Increase for 2023: 34.5pp

Over the five years through 2023-24, airports' revenue is slated to contract at a compound annual rate of 2.9% to £10.2 billion. Trends in domestic and international air travel have a huge influence on airports' performance, as they provide support activities to both passengers and transport companies. The main thing shaping the industry in recent years is the COVID-19 pandemic, which temporarily decimated air travel; airports are yet to fully recover from the COVID-19 hit.

Airports have increasingly diversified their sources of revenue, expanding into other commercial markets, including retail concessions, other property and car parking facilities. The Civil Aviation Authority... Learn More

6. Real Estate Investment Trust Activities in the UK

Percentage Point Increase for 2023: 28.0pp

Real estate investment trusts (REITs) are attractive investment vehicles, as they are exempt from corporate tax. A reduction in REIT requirements and restrictions has encouraged new entrants, although many were hit hard by the retail crash during the COVID-19 outbreak. Revenue is expected to decline at a compound annual rate of 4.2% over the five years through 2022-23 to £6.2 billion, and profit is expected to be 17.7%.

As many REITs own some form of retail and office property, lockdowns and social distancing measures during the pandemic meant the REIT industry lost revenue. Many REITs were forced to sell assets to... Learn More

7. Online Travel Agencies in the UK

Percentage Point Increase for 2023: 25.1pp

Over the five years through 2023-24, revenue has fallen at a compound annual rate of 5.6%. Faltering conditions in the air travel market weigh on finances as Online Travel Agencies (OTAs) scrabble to issue refunds and make alternative travel arrangements for consumers when airlines go bust or strikes happen. Unsurprisingly, OTAs didn't escape the effects of the COVID-19 outbreak and travel restrictions across the globe with plummeting sales, litigation threats and restructuring activity. Bookings exploded following the scrapping of travel restrictions for all travellers in March 2022. Still, OTAs' troubles weren't over immediately when borders reopened – the spike in... Learn More

8. Sea & Coastal Passenger Water Transport in the UK

Percentage Point Increase for 2023: 24.2pp

Over the five years through 2023-24, sea and coastal passenger water transport revenue is anticipated to drop at a compound annual rate of 6.6% to £2.3 billion. The industry is heavily reliant on domestic and international tourism. Cruise ships have performed robustly over most of the period and have expanded by marketing value, including all-inclusive holidays. However, demand for international ferry services has wavered as a result of intense competition from air and rail transport. Travel restrictions in response to the COVID-19 outbreak caused passenger numbers to plummet during 2020-21.

Changing tourist trends and technological developments have maintained a strong demand... Learn More

9. Banks in the UK

Percentage Point Increase for 2023: 23.4pp

Over the five years through 2023-24, UK banks' revenue is expected to grow at a compound annual rate of 0.3% to £123.2 billion, including anticipated growth of 9.9% in 2023-24. Low interest rates after the financial crisis limited the interest earned by banks from loans, hitting income. At the same time, a stricter regulatory environment, including increased capital requirements introduced under the Basel III banking reforms and ring-fencing regulations, constricted lending activity. To protect their profitability, banks have shut the doors of lots of branches and made substantial job cuts.

The COVID-19 outbreak triggered a dramatic decline in revenue during 2020-21... Learn More

10. Festivals in the UK

Percentage Point Increase for 2023: 23.1pp

Over the five years through 2022-23, the festivals industry's revenue is projected to expand at a compound annual rate of 2.9% to £3.3 billion. Revenue growth has been limited primarily due to unfavourable operating conditions during the COVID-19 outbreak. Profitability in the current year has improved due to a solid return to festivals as the pandemic winds down. On-site services, including food and drink sales, have proved a key revenue growth stream as festivals expand their services and overall experience.

In 2022-23, revenue is anticipated to balloon by 22.3% as festivals are back in full swing and aided by favourable weather... Learn More