As sport venues return to life following a pandemic-induced shutdown, Chris Gardner, Senior Manager at 4C Associates looks at how they can focus on maximising revenues generated across all levels of hospitality by improving margin, increasing quality and service, and reducing costs.
According to UK Hospitality, the hospitality sector has lost over £100bn in revenue during the lockdown, with sport venues missing out significantly on ticketing, merchandising and broadcast revenue. Corporate hospitality was already under pressure pre-pandemic, due to spend caps introduced by compliance departments, resulting in premium boxes being taken up by high net-worth individuals instead of businesses. Following that trend, post-lockdown fans returning to stadiums are spending more on experiences, taking increased interest in tailored packages and driving up pent up demand for hospitality boxes and premium experiences.
A recent research study conducted by procurement consultancy 4C Associates highlighted that whilst 57 percent of spectators planned to return to their usual sport and entertainment activities after lockdown, over 72 percent expressed concerns about booking live events in advance in case of cancellations and money-back disputes. The research has shown that sports fans remain conscious about the risks of large-scale events, with crowd management being a key concern for over 57 percent of consumers, followed by 52 percent who were uncertain about health and safety and transmission risks and 46 percent who feared long waiting times.
The current sector status calls for an innovative approach centered around the changing consumer attitudes and concerns, and one that will reduce the revenue gap caused by last year’s events, as well as drive revenue growth in the long term. This will require more than simply reopening the doors and inviting the public to return – to make up for the losses over the last 18 months, the industry needs to maximise the revenue generated across all levels of hospitality by improving margin, increasing quality and service, and reducing costs.
The demands of fans returning to stadiums are evolving rapidly with demand growing for an immersive, personalised experiential package. The traditional loyal fan base remains; however, a growing proportion are now seeking differentiators away from the pitch that would enhance their experience, be it in the booking journey, F&B range or anytime anywhere personalised access via the latest technology.
To remain viable, and operate at an acceptable margin, operators must manage costs, simplify operations, and potentially take some unprecedented steps to increase revenues. A more efficient supply chain offers sustainable solutions and reduced contamination risk, as well as improved contract terms with suppliers to mitigate supply risks. In addition, working with food and beverage partners can provide advanced bookings and delivery of food and drink packages. The relationship between buyers and suppliers during this time is critically important – in order for both sides to survive, they will need to work together, and compromises will have to be made. Localisation, transparency and collaboration are the new normal and these require different skillsets in addition to the current supplier management approaches, moving the discussion away from price.
The lengthy periods of social distancing and economic uncertainty have impacted the way consumers behave and how they approach sports entertainment, and whilst there is a positive outlook on restoring consumer demand, their behavioural patterns and attitudes are not linear and operators must adapt accordingly.