Sometimes it’s tempting to wonder who, in their right mind, would choose to run a leisure business? The challenges in recent years have been nothing short of Herculean. No sooner had the industry began to recover from the wreckage of Covid-19 it was hit by a storm of inflationary pressures and a cost-of-living crisis that squeezed consumer demand. The most recent set of woes came in the form of the UK government’s budget which has piled on yet more pressure in the form of hikes in National Insurance and the minimum wage – both particularly punishing for a sector where labour costs routinely exceed 30% of all operating costs.
Yet, despite near term pressures – and there are many – there is a strong argument that the long-term investment case is strengthening for those operating in the experience economy.
As technology continues to evolve at breakneck speed and people conduct more of their day-to-day lives in an increasingly automated, digital world, the theory is that opportunities for genuine human interactions will hold even greater value to consumers. As AI advances and many industries brace for disruption (and in some cases, displacement), the leisure, travel, and hospitality sectors that thrive on genuine human interaction offer a valuable counterpoint.
As Nusier Yassin – the viral vlogger and brand builder known as Nas Daily – compellingly explained in his keynote speech at the recent (and excellent) annual Houlihan Lokey consumer conference, the B2C companies that succeed over the long-term will be those that bring communities together and facilitate enriching human interactions. Consumers, he believes, will actively seek out and put a premium on these kinds of businesses.
It follows that as consumer expectations and needs evolve, the people who are the human interface of the brand – the employees – will become an even more critical competitive advantage. While it can sometimes seem trite for businesses to talk to investors about the importance of employee engagement scores, these metrics must increasingly be recognised as a measurable driver of the customer experience and success.
This is only going to become more important. As Yassin also noted, in a world where more and more daily interactions are conducted online (and increasingly with AI-driven models), genuine and caring human interactions will become a premium feature in our everyday lives. Steve Byrne of Travel Counsellors—a highly personalised travel company*— summed this dynamic up impeccably: “You can’t beat a robot at being a robot—but you can certainly outperform it when it comes to genuine, human-centric service”.
In an increasingly digital age, businesses that have an inherent ability to harness the full power of human interaction – which ultimately relies on having an engaged and passionate team – have a unique opportunity.
So, while near-term sentiment around the leisure sector has not been helped by the recent budget, set against consumer mega-trends and a backdrop of technological transformation, the demand for enriching real-life experiences is only likely to grow. As consumers increasingly seek out moments that connect them with others in meaningful and memorable ways, the long-term investment thesis to back the experience economy has never been stronger.
*Referred to as the best reviewed company in Britain in THIS fascinating Business Leader podcast
