I suppose this should resonate not only with a Hendrix fan, or Hendricks drinker, but also with anyone in their fifties who have now watched their children grow up. We have seen them ‘go travelling” disappear to music festivals, acquire the latest technology available to them at whatever personal cost (to us!), and finally settle down (as we ‘ancients’ see it) in their late twenties. But something odd happened, they may have settled down, but the common thread still running through their collective lives, and which is at odds with the world that we grew up in, is the value that they put on ‘experiences, compared with material goods. (apart from ‘tech’ which is essential to all on earth now).
Thirty years ago, success in the leisure & hospitality sector came from those with the right location, brand scale, personality and charm all designed to enchant their customers in to buying. Now the landscape has firmly changed, you don’t have to be the biggest to have a big presence. Baby Boomers became Generation X and then became Millennials and they are all now seeking and sharing their experiences at various social spaces within their own ‘community’. So, we will continue to see the growth of the “sharing and experience economy” becoming the bedrock of the hospitality and leisure industry again soon.
This clarity has set the pace for the marketeers who have joined forces with the IT functions in order to pump out content that sits within the full spectrum of a digital and marketing experiences. My good friend ‘the marketeer’ and who professes to understand this lightning bolt of change, tells me that in digital marketing there is a two second rule which is the time in which you must deliver ‘epic content’ to your audience or perish (digitally speaking). Combine this speed of delivery with the statistic that 74 percent of millennial customers prioritise their experience over the product, then you know that this is not just about adjusting your commercial course, it’s about completely reinventing your business and being prepared to go through the same process every few months. Realistically this calls for the scrapping of the corporate Super Carrier and the launching of dozens of high-speed frigates, captained by small teams that can turn on a dime and make one. A venue manager in a large corporate that I once worked for said to me ‘the milk turns quicker than this Company does’, and right now the milk is going off even faster.
I recently had a look at a small business called Dirty Martini, which is a great name by the way, well done to someone. I have never been to a “Dirty Martini” why would I? I am not their target audience anymore and I am only aware of them because my Instagram feed tells me that my daughter and her friends have been. This is not because of the famous Dirty Martini Wings picture, that every girl who goes there snaps herself in, (including my daughter) but the ‘Cocktail Masterclass’ she attended with a group of her friends. The new skill she acquired from her experience has now been shared with her family and I must say has come in very handy over the last 12 months of lockdowns. So, for a couple of reasons they got my attention and I then decide to show a more professional interest in Dirty Martini’s operation to find out quickly that while they only have 11 venues across the UK, they have a social media presence and following equivalent to a FTSE 500 hospitality company. I would also guess that they have a management team who live, eat and breath that business and that they have a team of staff who love going to work. It all makes a difference in way that the several layers of corporate nonsense in the Super Carriers can never match, and there lies a future challenge.
‘The highly fragmented nature of the leisure sector means that operators need only a handful of sites now to become a genuine contender as a national brand’ – Savills.
Clearly that statement very much depends on what your metric is but the scribbler at Savills who wrote that is pretty much on the money.
Some of the new leisure experiences I have seen emerge may not be scalable because; they require a large cheap property, in a prime location, or they have a high capital costs to set up, or there is only enough room for 12-15 of them in the UK and it require a sales operation driving the business volume. Having said that if you put a group of these businesses together, reduce your overheads, centralise your support functions and create a culture of creativity that seeks to constantly bring new experiences to the market (and ditch the old ones) then you could be on to something…
The smart investor will require an understanding of what is required for an amorphous business like this to thrive, a regular review of mindset and operating principles, and a constantly shifting investment model designed to nurture new ideas, whilst at the same time maintaining the maturing sides of the business as long as they continue to throw off cash. As an example, a suite of leisure experiences for summer and winter, operating out of the same property with the same team of staff could provide the scale a shareholder needs and of course it also needs incentivised and driven owner managers. A lot of this is not new thinking, some of the great leisure and hospitality PLC’s of the late 80’s and 90’s achieved double digit growth for many years, by evolving complimentary portfolios. But those businesses had big, low revving diesel engines at their heart, what is needed now is super high revving electric motors to keep up with digital trends. What is constant however, is that leisure experiences should continue to be used to evolve and transform dead unprofitable spaces, especially in good locations, and this needs a collaborative effort now from both operators and landlords more than ever.
Many of my friends and former colleagues are very concerned about the months and years ahead of us and I am sure we will see some very high-profile casualties in the leisure and hospitality sectors. Some of my previously defined Super Carriers are going to capsize and it will be the smaller, more energetic and more evolutionary operators that will survive and thrive this new era. These businesses need clear leadership and those business leaders need to be able to draw on experience without committing to a long-term increase in their overhead. This is where a third-party advisor can come into their own, by not being held back in small business politics and not being afraid to challenge current management thinking.
As a former seasoned LEADER WITH direct experience of a number of different leisure and hospitality businesses, I am delighted now to be working with a wider portfolio of people in businesses all seeking to create a positive springboard into 2021. My suggestion is that any leisure, gaming or hospitality business, or business leaders requiring some fresh thinking, help with re-opening plans, or a review of their customer experiences, should make contact to arrange an initial consultation session to see where the additional value can be unlocked.