The current and expected state of the hospitality sector in Australia

It’s important to understand the factors that impact your industry to see how your competitors are tracking. This is a good gauge to see your business performance. Here is a view of the current and expected state of the hospitality sector in Australia.

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Hotels and resorts are still Australia’s preferred type of accommodation as overseas visitors increase and exchange rates drop. Domestic overnight visits have increased as well, with expenditure increasing across the country. Airbnb remains a major competitor though, with growing investor interest in home-sharing start-ups. Airbnb has contributed billions of dollars to Australia’s GDP and supported thousands of jobs, further contributing to the national economy.

The restaurant industry is being disrupted by the increase in food delivery services and apps but the foodie culture is anticipated to underpin revenue growth in restaurants. Pubs are transforming from watering holes to gastronomy destinations and because of the growing revenue from food, operators are starting to market their pubs as an alternative to restaurants.

Premium food sales have improved profit margins nationally. Greater menu sophistication drives revenue from food rather than drinks but the craft beer industry has flourished in recent years as well. The strong growth in craft beer has sparked interest from international conglomerates who purchase craft breweries in the country.

Food delivery services are creating competition through the new home delivery method that eliminates the complexity of managing a delivery service. Busy customers spend more of their food budget on takeaways and food orders are forecast to grow to $4.2 billion by 2025. Profits within food and beverage services are being squeezed as the industry remains one of the most competitive in the nation.

The hospitality industry faces a few challenges because of broader economic conditions and changing consumer preferences. There is also a looming decrease in disposable income and consumer sentiment, as eating out is beginning to be perceived as a luxury. Diners start to overlook premium restaurants for mid-tier options and avoid high margin items like entrees, desserts and beverages.

Growth increases competition and what restaurant and bar operators do now is collaborate and innovate by launching marketing campaigns to encourage mid-week customers and reinvigorate the CBD. They also undergo refurbishments to compete with the rise of small bars.

Opportunities lie in the growth in number of international visitors from the USA and Asia, which is forecast to have the fastest growing middle-class population over the next 10 years. Business owners can also capitalise on the consumers’ busy lives by providing convenience.

Forecast industry growth

Projected revenue growth (2017-2022)

Projected revenue growth (2017-2022)
Hotels and resorts 11.6%
Restaurants 2.9%
Cafes and coffee shops 4.8%
Pubs, bars (and nightclubs) 5.3%

Source: IBIS 2017

Australian Wage Price Index

Index Wage growth by state (2017)
New South Wales 126.8 2.1%
Victoria 127.4 2.0%
Queensland 127 2.0%
South Australia 127.5 2.1%
Western Australia 127.7 1.3%
Tasmania 127.6 2.2%
Northern Territory 127.8 1.9%
Australian Capital Territory 125.5 1.9%
Australia 127.1 2.0%

Source: WA Treasury 2017

As you look for different ways to grow and improve your business, seeking professional advice from a hospitality business consultant could prove to be an important and helpful decision.

You can click here to speak to hospitality business experts. We would love to help you formulate investment strategies and streamline your processes to take your business to the next level.  Our goal is to help you grow your business, find ways to invest more and increase your productivity.

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