The way back for food, tourism and entertainment
Top 1000: After a tough year across various sectors – how can the experience economy be revived?
The experience economy encompasses businesses in the hospitality, retail, travel, food, drink, tourism, entertainment, technology and events industries.
Having been only able to trade in a very limited capacity - if at all - over the past 16 months or so, one sector that has been harder hit by the pandemic than many is the so-called “experience economy”, which encompasses businesses in the hospitality, retail, travel, food, drink, tourism, entertainment, technology and events industries.
But with restrictions lifting into the summer, now the focus is on getting back to growth.
Pat McDonagh, founder of Supermac’s, admits that his business was better off than many in that it continued to operate during lockdown via drive thru, collection and delivery services.
Staffing was an issue in the catering sector even pre-pandemic and there are currently hiring challenges.
“Because we were one of the first re-employing we encountered this challenge a bit earlier than others,” says McDonagh, who believes that in some cases the pandemic unemployment payment (PUP) has been a disincentive to work.
“It’s not all bad though,” he says. “We have been lucky that we’ve been open for ten months and we have good staff who have stayed with us. A lot of businesses are going to find it difficult to recruit staff in July and August when things open up.”
He believes that many young people will only want to work part-time this summer as they “feel like they’ve missed out on a year of their lives”.
McDonagh says that there are opportunities for the experience economy as restrictions lift.
“There’s a great opportunity for the government to introduce a staycation voucher and to promote areas which traditionally might not have been tourist destinations. There is a lot of room for the growth of outdoor experiences in relation to the waterways and greenways,” he says.
That said, he says funds set aside to assist hospitality with outdoor dining could be multiplied 10-fold and still not be enough. He says that the continuation of the Employment Wage Subsidy Scheme (EWSS) is necessary because it will be challenging to recruit staff.
“I think the government has done a reasonably good job but the hospitality industry does perhaps need more attention than other sectors at the moment,” he says.
Chief executive of Staycity Aparthotels Tom Walsh is well placed to compare responses to the pandemic in Ireland and abroad. The Staycity portfolio boasts 20 properties across Ireland, UK and Europe with 11 openings planned by the end of this year. Last year the business was recapitalised with the Ireland Strategic Investment Fund taking a 13 per cent stake in the business.
Like McDonagh, Walsh believes the hospitality sector needs a lot of help to rebound.
“Given that air traffic in Dublin Airport is at the bottom of the league table I think the government has inflicted extra damage on hospitality, restaurants etc.,” he says. “I understand why they did it, because our hospitals were less well set up, but I think hospitality has been crushed significantly more in Ireland than in other regions. You would therefore expect that the government would try to assist the sector more. I don’t think that has been the case.
“In France, Germany and Italy, we’ve been able to get low interest, long-term government loans... To get the equivalent amount of cash here we had to sell equity in the business.”
Long-term this will be positive for the company, though, as “pension funds love the fact that we have a sovereign shareholder in our registry now as opposed to private equity backed platforms”.
Several actions would speed up the economic rebound, he believes, including EU vaccination passports and a travel bubble with the UK. The sooner large scale events can take place safely, the better in terms of driving demand for accommodation and other aspects of the experience economy.
He would like to see VAT on goods and services in hospitality and tourism eliminated for a while.
“Hotels have burned through extraordinary amounts of their cash reserves. Prolongation of wage subsidy schemes [is recommended] so that, while we are operating on lower occupancy, some of that burden is shared by the government in recognition of the extra burden they probably placed on this sector compared to our European peers.”
Bringing it together
To kick-start the sector, business association Ibec has launched a campaign around the experience economy, aimed at bringing together stakeholders to highlight how important, and how interconnected, businesses are
“The experience economy revolves around the experiences that we all love to enjoy, that are important to us as Irish people, to tourists coming to Ireland and to businesses that come here,” says Sharon Higgins, director of membership and sectors at Ibec.
Higgins says that the solutions to the post-pandemic rebound will involve multiple stakeholders. “We’d like to see this elevated within government and real ownership of this going forward. We have reached out to all of the secretaries general across all of the various departments and also to Enterprise Ireland and the IDA and we are starting a series of meetings with them over the coming months,” she says.
Higgins says that the government’s roadmap must be aligned with an ongoing review of reopening timelines that accurately reflect the risk reduction that the vaccine programme is delivering.
“As swift a return as possible to office work is vital, in order to preserve the future of experience economy businesses that rely on office worker footfall for their survival,” she says.
The Top 1000 magazine and listings is published on Friday 11th with The Irish Times.