The growing influence of social media and the rapid pace of technological change is proving challenging for hospitality businesses.
Our research has found the biggest issue facing the hospitality industry is penalty rates, topping the list – at 56% ahead of card fees – 34%, liquor licensing – 15% and lock-out laws –7%.
|Q. What are the top 3 challenges facing your business today?||Result|
|1. Penalty rates||56%|
|2. Increased competition||40%|
|3. Credit card / Eftpos fees||34%|
Despite penalty rates coming out on top in a survey of more than 434 hospitality workers, the industry remains divided about the best way to address the issue. Almost a third – 30% – say they should be abolished completely, a quarter – 27% – say Saturday and Sunday rates should be equalized, and 22% say they should not abolished but be decreased.
The issue of penalty rates is an important one for the hospitality industry, being a highly labour-intensive industry. In fact, IBISWorld said that wages will account for the second-largest share of revenue for cafes and coffee shops this year.
Couple this with the fact that a major portion of sales in this industry is generated over the weekend, and you can start to understand the impact penalty rates has on hospitality businesses. It’s an urgent issue that the Government needs to address.
Card fees impact revenue
The second biggest issue facing the hospitality industry is the fees linked to card payments, with 34% of hospitality workers listing it as a top issue. The industry is keen to see the Reserve Bank of Australia (RBA) cap these fees, which is expected to happen tomorrow. Based on customer data from Impos, then extrapolated across the industry, if fees are cut in line with expectations the Australian hospitality industry would save $8.5 million every month.
Pace of technological change leaves tech laggards behind
The growing influence of social media and the rapid pace of technological change is proving challenging for hospitality businesses, with a third – 37% – of workers describing their place of work as ‘slow to adopt new technology’. Top technological challenges include using social media effectively – 67%, the expense and complexity of upgrading technology – 46% and 39%, and increased customer expectations around online and mobile bookings – 26%.
|Q. In regards to technology, what are the top challenges facing your business today?||Result|
|1. Using social media effectively to market the business||67%|
|2. The expense of upgrading technology||46%|
|3. The complexity of upgrading technology||39%|
|4. Increased customer expectations around online and mobile bookings||26%|
|5. Competitors using new technology to improve their business||20%|
|6. Increased customer expectations around online and mobile ordering||18%|
Technology is a fantastic tool for hospitality businesses, allowing them to improve customer service, boost business performance and create a competitive advantage. However, those business owners who lack the technical know-how or are afraid to embrace innovation can be very quickly left in the dust of the more tech-savvy.
Just as in other industries, we are seeing a divide between those businesses with the digital capabilities and those without, highlighting the importance of investing in digital skills.
Sean O’Meara, CEO, Impos