By Andy Young
A 2015 Hospitality Insights report by corporate advisory firm Ferrier Hodgson has highlighted that "the rosy future of the [hotel] industry was marred by three key factors".
The report, which was based on a survey of over 240 hoteliers, listed ageing hotel operators, a lack of succession planning and significant concerns over regulatory uncertainty as the main issues, however it did also offer some advice for hoteliers on attracting customers and increasing revenues.
Report author Morgan Kelly said: "Nearly half the publicans surveyed have been in business for more than 21 years. Costs of entry, succession and the need to innovate are emerging as big challenges for the future of the sector."
At the same time regulatory issues loom large and uncertainty over legislation is the biggest concern of all operators.
Forty-five per cent of respondents nominated this versus 28 per cent who are concerned over access to funding.
Mr Kelly said that Ferrier Hodgson had seen a return of investor activity to the sector as funds chasing higher yielding alternative investments begin to look at hotels.
"There have been a number of significant transactions nationally and an increase in the number of genuine and non-distressed vendors testing the market, with particular buoyancy in metropolitan markets."
But while those concerns exist, there is still a lot of room for confidence within the industry
In the report Kelly wrote: "The sector remains vibrant, challenging, and innovative. Confidence is clearly returning and the market for hospitality assets has been extremely active."
The report also highlights the importance of diversified revenue streams with food being the number one revenue growth target for 35 per cent of operators.
"Diversified revenue streams minimise risk and most operators see the future is in food, but only for those who have elevated traditional pub fare into a major draw card for the venue.
"In part it's due to the 'MasterChef' phenomenon," Kelly said.
"When people do venture out of home, they have much higher expectations in terms of food quality, delivery and even a story on the provenance behind the food."
The report also said: "We believe that the increasing relevance of food and beverage indicated by the responses in the survey could be the result of hotel operators responding to the uncertainty surrounding the future of gaming. Smart operators have re-balanced their revenue sources to reduce their reliance on gaming income."
There was also some advice for hoteliers regarding reinvestment and some simple ways to help attract more consumers.
"Competition is fierce," the report said, "with reinvestment and regular venue updates crucial, especially for metropolitan venues. Reinvestment doesn't just mean refurbishment. Spending on point-of-sale technology, social media campaigns, or new entertainment concepts are all keeping venues fresh and interesting, and drawing customers in."
It added: "The secret to the success of a hotel operation lies in its use of the social media channel, Instagram. Every single hotelier who reported using Instagram as part of an integrated marketing strategy forecast revenue growth this year."
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