Why are so many hospitality businesses failing?
If consumers are spending more money on hospitality, why are so many hospitality businesses failing?
Western Australians are spoiled for choice, with an ever-expanding variety of restaurants, bars and taverns to choose from. But with the ballooning hospitality industry comes stiff competition for hospitality operators to survive and stand out, as Avior Consulting Director Dermott McVeigh explains.
The economic boom Western Australia experienced between 2006 and 2012 motivated consumers to double their spending in the hospitality industry. However in recent years, spending within the industry has levelled, and is no longer on the rise. Despite this, Western Australians are still spending more than ever at a specific subset of hospitality venues – namely small bars, restaurants and hotels.
While spending in this industry has increased significantly compared to spending prior to 2005, so has the number of licenses issued. In a delayed response to the market, the number of operators in the industry increased by 20 per cent from 2012 to 2016 according to findings from Avior’s Hospitality in Western Australia 2018 Industry Report. This has resulted in an immensely competitive market, one that many operators have not been able to keep up with.
With the high level of spending in the industry, many prospective operators are assuming patrons will come organically to their business once it opens. But in such a competitive market this mindset is not enough to ensure success. It is essential that restaurateurs and hospitality managers re-evaluate their strategies regarding how they communicate with potential patrons. Business owners need to see themselves as marketers.
No matter what industry, the companies at the top of their game have marketed their brand strategically and effectively to targeted audiences. To achieve this, operators need to reassess their marketing strategy, or more importantly, put one in place if there isn’t one.
How are you communicating your brand to your audience? What are you doing that is different to your competitors? The market is brimming with consumers with money to spend in your industry, so carving out a piece of that market for your business is vital. But, marketing is only effective when done so strategically.
There are misconceptions around what constitutes success in social media marketing. A large following is great – but if you are not convincing your audience to physically visit your venue then it is wasted effort. It is not enough to set up social media accounts and post photos haphazardly. Marketing your unique brand must be done intelligently and strategically and this should start by understanding your audience. What demographic you aiming to capture? Which sector of the community are likely to be interested in your offering?
When you have assessed your audience, it is essential you begin building a following with them and create targeted content that entices them to your business. Venues that dedicate resources towards improving their marketing strategy will find they are best positioned to benefit from the current market in the Western Australia hospitality industry.
Avior Consulting’s specialist team has conducted extensive research on the hospitality market, releasing the Hospitality in Western Australia: 2018 Industry Report. Download the report here. This report provides an in-depth analysis of the hospitality industry and provides direction for operators within this field.