Hotels and club operators continue to diversify their revenue streams for long-term viability. In this Insight, we review current revenue trends and their likely impact on operators in New South Wales.
Gaming revenue – improving
- NSW’s hotel and club gaming revenue increased 5.6% and 3.3% respectively in 2011 compared to 2010. This is likely as a result of the implementation of outdoor smoking solutions in most venues.Stakeholders should be aware that some of these outdoor smoking solutions may not have required DA approvals and/or may not comply with the requirements of Smoke-free Environment Regulation 2007 legislation.
- The Federal Government recently announced that independent MP Andrew Wilkie’s gaming reform proposal has been deferred and replaced with a trial of mandatory pre-commitment in clubs located in the Australian Capital Territory. Clubs will receive a monthly compensation fee from the Government for participation. Lead time for the ACT rollout has been provided to allow for the need to install new technology to poker machines.
- Given that gaming legislative changes are yet to be finalised and economic uncertainty prevails throughout the world, it remains to be seen if the gaming sector’s revenue trend remains positive throughout 2012.
Bar revenue – shift in taste
- Alcohol consumption remains on the rise and is forecasted to continue rising in 2012[1] .
- Beer sales are at a 60 year low, while beer consumption is forecasted to continue to decline over the next five years. These declining consumption trends are due in part to changes in attitude toward alcohol consumption and an ageing population.
- However, as beer sales decline, sales in wines and ciders have steadily increased, thereby increasing pressure on hotels and clubs to expand their product offerings. This trend should result in stronger patronage and revenue growth for those operators who diversify their beverage offerings.
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Inner-city venues have faced significantly increased competition from small wine bars whose start-up costs are minimal compared to traditional venues.
Accommodation revenue – untapped nomad potential
- Revenue margins from accommodation are almost pure profit due to minimal operational costs.
- Astute hotel and club operators are using capital expenditure to improve the range of accommodation offerings that can attract well-heeled grey nomads and in the case of venues located in boom mining regions, workers associated with those mines.
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Stakeholders should be aware of the recent changes to the Building Code of Australia[2] where renovated hotels will be required to adhere to the Disability Standards which includes the provision of facilities such as lifts to first floor accommodation. These changes should not affect existing accommodation facilities.
Source: The NSW Office of Liquor, Gaming and Racing
Contacts
Sydney
Jack Bournelis
Partner
t: +61 2 8116 3080
m: +61 417 834 494
e: jbournelis@ppbadvisory.com
Brett Manwaring
Director
t: +61 2 8116 3089
m: +61 408 253 954
e: bmanwaring@ppbadvisory.com
John McInerney
Senior Manager
t: +61 2 8116 3043
m: +61 405 158 348
e: jmcinerney@ppbadvisory.com
Richard Yap
Senior Manager
t: +61 2 8116 3006
m: +61 413 007 612
e: ryap@ppbadvisory.com
Melbourne
Craig Crosbie
Partner
t: +61 3 9269 4266
e: ccrosbie@ppbadvisory.com
Brisbane
David Leigh
Partner
t: +61 7 3222 6822
e: dleigh@ppbadvisory.com
Perth
Simon Theobald
Partner
t: +61 8 9216 7601
e: stheobald@ppbadvisory.com
1 IBISWorld Special Report November 2011 – Premium purchases: Australians are thirsty for premium beverages
2 Australian Government: ComLaw, http://www.comlaw.gov.au/Details/F2011C00214
Important: This information is not advice. Readers should not act solely on the basis of information contained in this document. We recommend that formal or independent advice be sought before acting in the areas covered herein. 00242INS. January 2012.
