Stricter licencing laws limiting operating hours are expected to be the biggest threat to the industry over the next five years.
Melbourne, Australia (PRWEB) November 24, 2014
Nightclubs, which predominantly operate late at night and during the early hours of the morning, are differentiated from pubs and bars by the inclusion of a DJ booth and dance floor. “Industry performance depends on consumers' alcohol consumption, their discretionary income, the size of the population aged 18 and over, and demand from tourists due to the location of nightclubs in tourism destinations,” according to IBISWorld industry analyst Jem Anning. Operators in the Nightclubs industry in Australia have benefited from increasing discretionary income, consumer sentiment and tourism over the past five years. However, industry operators have faced intensifying competition from live music venues, while declining per capita alcohol consumption has somewhat constrained the earning potential of cocktails, beers, wines and shots. IBISWorld forecasts that industry revenue will rise at an annualised 2.2% over the five years through 2019-20, to $1.2 billion. This includes growth of 1.8% over 2014-15.
Over the past five years, competition from live music performances at small bars, pubs and stadiums has increased. Websites such as SoundCloud and Bandcamp have allowed musicians to easily distribute their music. “This has increased demand for live music performances at small bars and clubs, where musicians with small fan bases are likely to play,” says Anning. Furthermore, the number of big-name international artists performing to stadium crowds has increased. This higher competition from both ends of the popular music entertainment market has limited industry operator's ability to pass on high operating costs in the form of more expensive cover charges or drink prices. As a result, nightclubs' operating profits have declined. The industry displays a low level of market share concentration.
The biggest threat to the Nightclubs industry over the next five years will be stricter licencing laws that limit operating hours. The NSW Government has implemented a 1.30 am lockout in parts of Sydney to curb alcohol-fuelled violence. This may encourage other states to follow suit. IBISWorld forecasts are based on existing legislation.
For more information, visit IBISWorld’s Nightclubs industry in Australia report page.
Operators in the industry provide on-premise alcohol sales and entertainment, and predominantly operate at night.
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