New Entrants, Blessing or Blight….
New entrants keep markets fresh – but they cause problems for incumbents.
Restaurants, bars, hotels, you name it:
- Bars, restaurants:
o Peach Tracker shows total sales > LfL by c3%. That’s the impact of new capacity
o Some will be new entrants & others will be incumbents bulking up
o But the latter can lead to cannibalisation (RTN)
o Incumbents can become lazy, entitled. New entrants are relevant, nimble
o London hotel market ‘added 18k budget rooms between London Olympics & now’
o Rates & occupancy there said to be under pressure, not likely to abate
Lemmings & rabbits, restaurants & hotels, overproduction is often the issue:
- There’s rarely a shortage of grass but there are often too many rabbits
- Leisure is an enticing field as operators know it is a premium-to-GDP-growth market
- But that’s not a secret, oversupply can be a problem
- There is no braking mechanism, there is a crashing mechanism
So what to do?
- Prisoners’ dilemma, tragedy of the commons etc.
- What’s good at the micro level may upset the macro
- Operators do communicate, but they rarely back down. You open 3k rooms, we’ll open 4k.
- And we know how that ends – for the incumbents at least
- This is a 200-word piece; you could write 200,000 but consider the winners & likely losers
- New entrants such as Franco Manca, EasyHotel are worth a look
- Losers may (or already do) include RTN, WTB etc.