New Entrants, Blessing or Blight….

May 25 2016

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

  • Hotels:

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.