In today's competitive landscape, understanding customer trends is essential for success. The Global Leisure Perspectives 2023 report, provides a range of thought-provoking insights on four key priorities areas for the leisure industry. It is about what comes next, following a period of flux, evolutions and demonstrable resilience for the sector.
Driving customer loyalty
We know that value can drive future success. However, the customer’s perception of value is not just about the price and the experience anymore. It’s also about the “purpose”.
Over time, we have seen integrity – the level of trust in an organisation – become more prominent in determining customer loyalty. We’re seeing customer sentiment switch from “buying from” to “buying into” brands. This “switch” in purchasing behavior is reshaping the leisure industry and trends are emerging at a global level which have notable relevance for the Irish market.
- Growing social awareness - Our research has shown that nearly half of customers say that they are willing to pay more for goods or services that reflect their personal values. Within the tourism industry in Ireland, research has shown that tourism audiences are more sustainability-minded than the general public and leisure and hospitality providers need to think about creating sustainable experiences that make genuine social impact. See Sustainable Tourism in Ireland Understanding the opportunity - failteireland.ie (PDF, 7.4MB).
- Bleisure combines business with leisure - Bleisure defines a new type of travel: neither fully business nor fully leisure, but a combination of the two. In a post-pandemic landscape, bleisure is gaining popularity with accommodation providers facilitating business-friendly services, such as high-speed internet, workstations and conference rooms.
- Prioritisation of health and wellness – Globally, health and wellness is a thriving trillion-dollar market. Within the Irish context, holiday makers interested in wellbeing have become increasingly popular and service providers have responded by delivering unique yoga retreats, organic food offerings and immersive experiences that facilitate engagement with Ireland’s unique landscape and nature.
The impact of ESG
Tourism has a massive impact on global carbon-dioxide emissions and leisure providers are engaging with ESG to work out how they can lessen their impact and make a positive difference.
According to research, 83 percent of global travelers think sustainable travel is vital, white 61 percent saying the pandemic has made them want to travel more sustainably in the future. Businesses that do not engage in ESG risk becoming outliers. As they could lose increasingly environmentally conscious travelers.
In Ireland, the National Tourism Development Authority, Fáilte Ireland, is embedding a more sustainable approach into its regional tourism strategies. KPMG is supporting Fáilte Ireland with a decarbonization project for the cruise boat-hire sector, introducing lessons learned from other destinations, and assessing opportunities to green and renew the fleet.
KPMG believes that four key areas are driving positive change in this area. Specifically, risk, consumer demand, investor demand and reporting and competitive advantage.
This edition of Global Leisure Perspectives places ESG centre stage and the tourism sector must increasingly take responsibility for climate action. KPMG in Ireland are ready to help with what’s next and support the industry in their endeavors.
How technology is revolutionising leisure
Hospitality customers want exciting, innovative, and engaging experiences, which emerging technologies can enable. Next-level technologies, like Extended Reality (XR) and the Metaverse, are helping brands differentiate themselves and deliver experiences consumers seek. Recent research has shown that more than one-third of U.S travelers are keen to embark on a multi-day virtual-reality or augmented-reality travel experience.
These next-level technologies can create deep immersion experiences, while allowing for service providers to create high-value touchpoints leading to real revenue.
Within the Irish context, service providers have embraced these next-level technologies and are utilising them to bring the island’s historic importance, heritage and cultural diversity to the virtual visitor.
It is clear that the travel, leisure and hospitality industries are transforming. However, strong headwinds remain on the labour front and employee shortages aren’t going away. Irish employers are responding to labour shortages by offering more worker-friendly shift patterns and increasing pay rates, according to a study by Fáilte Ireland.
We believe that technology can be further used to tackle labour shortages and reduce staff turnover and ultimately, raise a new generation of leisure and hospitality worker with a passion for serving others.
Mergers and Acquisitions
The Irish market has seen an increased level of owner operated trading hotel assets coming to market during 2022 and 2023, in particular in regional locations, with notable examples including the Imperial Hotel in Cork, the Park Hotel in Kenmare and Ballymascanlon House Hotel in Louth.
Increased debt costs resulting from rising interest rates have compounded the impact of labour and energy cost inflation to increase hotels’ underlying costs. However, hoteliers have largely been successful at passing on cost increases to consumers with average room rates reaching record levels as demand returns to pre-pandemic levels and a sizeable minority of hotel rooms are temporarily taken out of the market for use as direct provision accommodation by the Irish State.
As a result, both family office/high net worth investors and operator groups have been active acquirers in the market with acquisitions perceived as providing both attractive yields on capital and a modicum of protection against inflation. For similar reasons, hotels are currently able to attract a reasonable level of debt financing, contrary to some other real estate sectors, from both the Irish pillar banks and alternative debt funds.
Despite the above, most assets brought to market have been single asset portfolios with the exception of a single large well-publicised hotel portfolio, which is yet to trade. We would expect to see further consolidation in the market as smaller owner occupiers continue to exit the market.
Finally, whilst planning applications for the supply of new hotel stock, in urban centres like Dublin, are continuing there is some evidence that two years of very high construction cost inflation has impacted the viability of new development with several projects being mothballed. As a result, constrained supply may help to support valuations and make acquisition rather than ground up development more attractive.
Get in touch
If you have any queries on the topics in our Global Leisure Perspectives 2023 report, and how they might apply to your leisure business, please contact James Chilton or David O'Kelly; we'd be delighted to hear from you.
James Chilton
Associate Director
KPMG in Ireland
David O'Kelly
Partner, Head of M&A
KPMG in Ireland
