According to a recent report from market research company IBISWorld, the Australian nightclubs industry is expected to decline by 2.9 percent in 2015-2016.
According to IBISWorld analysts, the forecast decline is largely due to increased regulation and decreased alcohol consumption among younger demographics. The industry grew only by 0.3 percent in 2014-15.
IBISWorld analysts suggest that the Sydney lockout laws – which were announced in late January 2014, and rushed through parliament following the death of Sydney teenager Daniel Christie – have precipitated the closure of several iconic nightclubs in Sydney CBD including Hugo’s Lounge Kings Cross and The Flinders in Darlinghurst. A number of venues inside the Sydney lockout zone have also reported large falls in both revenue and profitability.
In addition to the lockout laws, falling per capita alcohol consumption among younger demographics has also impacted negatively on the industry. IBISWorld analysts say that consumers under the age of 30 are one of the most crucial markets for nightclub operators and as a result, industry revenue has been dampened in recent years and is expected to remain subdued over the next five years.
While the nightclub sector is forecast to decline, IBISWorld senior industry analyst Spencer Little says that both Melbourne and Sydney have developed a strong bar culture over the past five years. This has seen consumer demand for these services has grow and divert spending away from nightclubs.
“Favourable licensing laws and changes in consumer tastes have also increased competition from bar and pub operators,” says Little.
Merivale CEO Justin Hemmes told Hospitality earlier this year that he decided to steer his business away from the nightclub scene a number of years ago and instead place a larger focus on the foodservice side of the industry. Hemmes says that the company’s direction shifted as his own personal taste changed.
“We’ve certainly moved from one end of the hospitality stick, and we’re heading down to the other: the more food and beverage oriented path as opposed to the nightclub path of 15 to 20 years ago,” Hemmes explains.
“It comes down to our maturity, my maturity, and a change in what my habits are. Fifteen years ago I wanted to go to a club for a good night. I don’t anymore; I’d rather go and have a fantastic meal and a nice drink in a beautiful setting. It’s personal taste.”
For the full Nightclubs in Australia – IBISWorld industry report OD5405, click here.
