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Outlook for Hospitality Industry Improves

Media Release Embargoed until 1am 2 July 2013


Outlook for Hospitality Industry Improves

As New Zealand’s economy continues to strengthen, so too does the hospitality industry.

The third annual Hospitality Report, the definitive guide to the performance of New Zealand’s hospitality industry was released today. Jointly researched by the Restaurant Association of New Zealand and AUT University’s School of Hospitality and Tourism, the report is an annual update on an industry that plays a significant role in New Zealand’s economy.

Highlights of the 2013 Hospitality Report include:

• Nationwide sales for 2013 are projected to increase by 3 per cent to $7.19 billion (2012: $6.98 billion)
• Number of outlets in 2013 is projected to increase by 87 to 14,636 (2012: 14,549)
• Number of employees in 2013 is projected to increase by 1 per cent to 104,525 (2012: 103,490)

Marisa Bidois, CEO of the Restaurant Association of New Zealand says that the past few years have been challenging for hospitality businesses.

“We are feeling more confident about the outlook for hospitality. We saw strong growth in overall revenue in 2012 of 6.7 per cent and expect a more modest increase in 2013. Our industry continues to grow, and with recent reports of consumer confidence improving, that too will have a positive flow-on effect in the year to come.”

The report breaks the industry into five key areas:

Outlet type 2012
No of
outlets
% of total 2012 Revenue
$m
% of total Incr in Revenue
$m
YOY trend
%
Cafes/Restaurants7,095493,485.050+185.6+5.6
Takeaways4,632321,492.321+123.9+9.1
Catering Services7735668.410+56.4+9.2
Pubs/Taverns/Bars1,629111048.915+81.8+8.5
Clubs4203283.54-9.8-3.3
Total14,5491006,978.1100+437.9+6.7

Amongst all hospitality outlet types, the strongest performer was takeaways, which have seen growth in sales and number of outlets every year since 2008.

By region, Auckland and Bay of Plenty experienced double digit sales growth up 11.9 per cent and 15.3 per cent respectively. Sales in the Manawatu-Wanganui, Canterbury and Otago regions all contracted by between 3.3 per cent and 4.1 per cent. For a detailed regional analysis, refer to the regional breakout included as an attachment to this media release.

“The hospitality industry is a fantastic barometer of any economy. It is the first to feel any economic downturn and one of the first to recover when the economy improves,” says Lindsay Neill, one of the report’s authors and Senior Lecturer, AUT University School of Hospitality and Tourism.

Discovering New Zealand’s Hospitality Personality
For the first time, this year’s report includes research on the hospitality personality, as a way to begin to combat the skills shortage facing the industry.

For this piece of research Neill collaborated with psychometric expert Dr Lawrence Powell to analyse responses from employers about desirable personality traits.

“In this first for New Zealand, the industry has taken steps to begin to understand whether there is a discernible hospitality personality and identify the desirable traits of managers and employees,” says Neill.

“Ultimately this research will allow us to create interview tools for the hospitality industry so the right people are employed. Targeted questions, in particular, will help employers to select candidates with the right mix of skills and attributes.

“A more strategic approach to recruitment will help to professionalise the industry and should translate into better customer service and stronger profit margins.”

Challenges Facing the Industry
With slim profit margins, currently running at just under 5 per cent, Bidois says that remaining profitable is a perennial challenge.

“Managing labour costs continues to be the single biggest challenge facing operators. We expect 2013 to be no different as the industry looks ahead.

“Maintaining sales volume is the number two challenge for this coming year. Operators have to make sure they do all they can to connect with customers. That means not only providing a great dining experience, but also presenting the right image and information online and making sure the website can be accessed by smart phone and tablets.”

Operating costs rounded out the top three challenges for the coming year as the industry continues to face cost increases across the board

The top five challenges operators expect in 2013 are:

1. Labour costs (2012 #1 challenge)
2. Building and maintaining sales volume (2012 #4= challenge)
3. Operating costs (2012 #3 challenge)
4. Lack of skilled employees (2012 #2 challenge)
5. Food costs (2012 #4= challenge)

Outlook for 2013
The long hot summer of 2012/2013 provided a much needed boost for the industry. Anecdotally the mood is more upbeat, and with the Christchurch rebuild flow-on effect, increased consumer and business confidence and reported increases in credit card spending, operators are cautiously optimistic.

There is light at the end of the tunnel, but we are realistic about the challenges, says Bidois.

“The hospitality skills shortage is a real and on-going problem for our industry which will hamper growth as the economy begins to improve, and margins will remain under pressure.

“On a positive note, economic activity and confidence is on the rise, and New Zealand’s employment levels are forecast to lift also. On that basis we expect nominal sales growth of around 3 per cent in 2013, and a small lift in industry employment levels and the number of outlets.”

Ends

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