Experience Economy Clearview
Scarica il pdfThe consumer move from buying physical products to increasingly enjoying experiences has been much debated in recent years. But latest evidence suggests that the seismic shift is now taking hold.
It is estimated that UK consumers will spend £129bn1 on leisure activities this year, a 17% increase compared to five years ago, with the figure rising to over £140bn by 2022.
Whether it’s outdoor assault courses, indoor climbing, go-karting, crazy golf, sweat crawls, trampolining, immersive theatre, virtual reality theme park rides, tenpin bowling, or escape room challenges, we all seem to be chasing the next experience.
Competitive socialising
What links many of these activities is the drive for so-called ‘competitive socialising’, a trend which is paving the way for a number of new leisure concepts. Although the broad trend began in London it is now quickly spreading across the country, particularly to regional cities.
The indoor golf market has been transformed by the likes of Puttshack, Swingers, Junkyard Golf, and Adventure Leisure. Aligned to this, operators are also adding quality food and drink offerings. For instance Pizza Pilgrims and Patty & Bun can be found at Swingers centres.
Linked with this competitive trend is the growth of the ‘adult leisure’ market and the focus on upgrading old concepts with an adult twist.
Just as indoor golf has been revolutionised, the likes of Lane 7 and All Star Lanes have reinvigorated the bowling market, targeting a more grown up clientele and again offering quality food and drinks. This has a broad appeal, capturing both social and corporate expenditure.
Premiumisation
While the drive towards premiumisation is not new, what it has done is change the motivation behind consumers’ purchasing decisions.
If you take the cinema market, still a hugely popular leisure activity in the UK with annual admissions at around 170 million, consumers are increasingly seeking a more exclusive offer and enhanced cinematic experience, a drive which has also led to the reopening of many old cinemas across the country. Independent boutique chains such as Everyman, Picturehouse and Curzon have all been busy enlarging their portfolio in recent times.
These wider trends are also borne out in financials. For instance the Everyman Media Group is currently trading at 22.3x EV/EBITDA, versus Cineworld’s 17.2x and AMC’s 7.4x.
Premiumisation has also been a successful strategy in the restaurant sector. Strong examples in the Indian restaurant market are Mowgli and Dishoom. Whilst Indian restaurants are certainly not new to Britain, these relative newcomers are starting to transform the quality and perception of the market.
1 Mintel – Leisure Review UK 2017
Outdoor and activity-led experiences
The continued success of established operators, such as Go Ape and Zip World, show the strength of this market. For instance the latter, which claims to have Europe’s longest ziplines, also offers underground trampolines and high-rope cavern adventures. The company opened its first zipline at a quarry in Wales, offering ‘the closest experience a human being can get to skydiving without actually leaping out of a plane’.
Trampolining is another market which has taken off since operator Bounce opened its first park in 2014. There are now around 100 trampoline parks across the country, although there are fears that the market is now reaching saturation.
Social media impact
The most successful operators have embraced social media, exploiting the high levels of engagement within the millennial demographic.
Anecdotal evidence suggests many consumers select their pursuit based on its ‘Insta-worth’ and the newer the venue or experience, the higher the number of likes often achieved. As such operators are increasingly building ‘selfie-friendly’ décor into their site configurations.
M&A activity
Against this backdrop it is little surprise that the market is seeing considerable M&A activity.
Recent deals include private equity group Duke Street acquiring TeamSport Karting, the UK’s largest indoor go-karting operator. The business, which went through a MBO in 2013, now operates 23 tracks and plans to further accelerate its growth.
The UK go-karting sector is still highly fragmented with more than 200 mainly independent, single-site operators.
Earlier this year The Climbing Hangar (TCH) secured a £3m investment from NVM. The business currently has three sites and the investment will finance further roll-out. TCH targets both climbers and non-climbers looking for a ‘sociable way to keep fit’, and also plans to use the investment to diversify the scope of its facilities into gyms, yoga and other specialist classes, as well as offering quality food and beverages.
In a further deal Paradise Island Adventure Golf, a chain of crazy golf courses, was acquired by The Brighton Pier Group for £10.5m. Paradise Island has six sites located in high footfall retail and leisure centres across the UK.
The future?
The strategy of the Brighton Pier Group, which bought the iconic south coast pier in 2016, is to grow a diverse portfolio of experiential leisure and entertainment assets in the UK. Could this be a sign of things to come from an M&A perspective?
We could be on the cusp of major consolidation within the sector. There is opportunity for many of these operators to come together and create a leading leisure platform, which embraces these ever-more personalised and interactive experiences, providing consumers with a broad range of activities and investors with a reduced level of exposure to changes in customer preferences.
