The road to post pandemic recovery for the leisure and hospitality industry has been marked with significant obstacles and challenges. The recreation and culture sector appeared to have bounced back strongly, however, it’s likely to slow down in the near future.
Hospitality and travel are lagging, but an interstate boom provides a much needed optimism for the industry. As households break free from long term restrictions, domestic travel is getting busier and more flights are added on a regular basis.
The outlook is positive but it’s clear there is still a lot to be done. While recovery post pandemic is a complex process, it provides the industry with an opportunity to transform the way they do things so they can emerge stronger and fitter. From delivering on ESG commitments to building operational efficiencies, focusing on the customer and zeroing in on data – all are important factors in ensuring industry growth.
Our team of experienced hospitality & leisure professionals are here to help. We’ll work with you so you can bounce back and emerge stronger for sustainable growth.
Current leisure and hospitality industry trends
Staying close to home
Since restrictions were lifted in late 2021, the leisure and hospitality industry has been in recovery mode. The major beneficiaries have been businesses in the recreation and culture sector. Spending on sporting events, leisure activities such as cinema visits and museums, as well as concerts and other arts venues in the first three months of the year was 26 percent higher than pre-COVID levels. Unfortunately, it is likely to decline as interest rates continue to rise.
International travel lags behind
In contrast, international travel will take longer to recover. COVID restrictions in major source markets (particularly China), limited availability of flights and rising fuel prices, and the global economic headwinds that are hitting consumers in most countries have posed as major obstacles for the sector.
Interstate travel is set to boom
Demand and spending on the hospitality and travel components of leisure has now returned to the levels seen in early 2020 but no further. The forward indicators suggest, however, there are reasons to be cautiously optimistic. Based on the airport passenger data, the number of interstate travellers, especially in and out of WA, has remained promising despite rising interest rates and cost of living pressures.
Labour shortages continue to bite
Regardless of the projected growth in travel and leisure, labour shortages continues to affect the industry’s path to recovery. It is estimated that 300,000 workers left hospitality during the pandemic due to uncertain working arrangements. Closed borders and travel restrictions only make matters worse as our hospitality industry has always relied heavily on travellers and international students.
Opportunity to reset and reimagine
Deliver on ESG commitments
Today’s consumers are more environmentally savvy than ever before and only want to engage with likeminded brands and businesses. It’s been observed that climate change elements are affecting consumer spending on leisure and travel – as people look for carbon neutral ways to reduce their footprint. Companies with a robust Environmental, Social and Governance (ESG) strategy will benefit not only from a regulatory standpoint, but also from a competitive advantage standpoint.
Focus on operating cost and supply chain efficiencies
Tourism supply chains are complex and include accommodation services, transport, food, beverage and entertainment provision through to food production, waste disposal and the infrastructure of venues and services. In the post pandemic era, it’s vital to review and optimise hospitality procurement including sourcing, contract negotiation, payment terms, and end-of-life management. Automating the tracking process of industry wide concerns – such as minimising transaction fees and reducing contract risk – has been proven successful in minimising supply chain efficiencies.
Invest in customer experience and demand
Financial pressures are changing customers’ buying habits and the sector needs to respond to this with investments in value creation, packaging of services and leveraging promotional and pricing strategies to convert on consumer interest and demand. Pricing elasticity reviews against occupancy and sales/revenue forecasting are highly recommended to maintain sustained growth. Businesses relying on the interstate travel market will need to think outside the box as the relative price of international v. domestic will continue to be a key driver in customers’ decision making process.
Leverage data for better decisions
Predictive modelling, consumer personalisation and privacy, cyber management and increased digitisation and automation are part of the future of leisure and travel businesses. An ability to generate reliable data removes the need for guesswork and help companies with creating effective business strategies.
How we can help
At KPMG, we are a team of experienced Leisure & Hospitality professionals that help companies across the sector to meet the challenges of recovery. We tailor our services to your unique needs, thinking carefully about how recent changes have affected your business, working with you to help ensure stakeholder confidence through this dynamic phase, allowing you to emerge stronger and fitter for the future.