The UK is officially in recession, with the economy contracting by 1.5% in the last quarter of 2008.
The drop represents the biggest quarter-on-quarter decline since 1980.
The previous three months saw a fall of 0.6%.
Liz Hall, head of research, Hospitality & Leisure, PricewaterhouseCoopers LLP, said: "The UK love affair with eating out and staying in hotels has been put on hold - but for how long we do not know. While output declines for hospitality & leisure were less toxic than that of manufacturing, H&L businesses have had their worst fears confirmed today.
"Distribution, hotels and catering declined by -2.4% in Q4 2008, compared with a -2.1% drop in Q3. These already unprecedented numbers have been heightened as consumers and businesses seek to reduce expenditure on non essential travel and entertainment.
"Personal and corporate belts have now been severely tightened and this has led to a significant reduction in revenues. Of course, as in previous recessions demand will one day recover. However, we do not know how many cold, dark winters and long, wet summers lie ahead for UK pubs, restaurants and hotels before they play their part in an upturn."
Mark Spinner, head of corporate at international law firm Eversheds, commented: “The early part of 2009 will be notable for consolidation in the retail sector, particularly distressed deals involving chains that are badly hit by a poor Christmas trading period and the quarterly rent roll. This will largely be a mid-market trend, with financial services consolidation continuing in the upper-market within jurisdictions heavily exposed to the credit crunch.
“The energy efficiency sector will continue to be attractive to both private equity and corporate investors. Transactions in the oil and gas exploration space will decline considerably if oil prices remain at the current reduced level, it being cheaper to purchase companies with existing deposits.
“The collapse in the banking sector is unlikely to recover in the short term as we return to a more balanced FTSE 100. In the 1970's I do not think that there were any banks that would have qualified to be in the FTSE 100 and this is likely to be the case with the recession today.
“As the money supply into the economy across the globe increases in an attempt to combat the credit crisis, gold and other precious metals will see strong recoveries. Gold may yet get back to the peak of nearly $1,000 an ounce, last seen in December 2007.
“The decline of sterling against the US dollar and Euro is likely to make UK acquisitions more attractive to well-capitalised corporates in the US and across the Continent. When combined with the weak UK public markets, this may also lead to increased public company M&A and possibly higher volumes of hostile takeovers.”
