'HOSPO' - the hospitality industry

What is it with us Australians? Faced with rising mortgages and electricity bills, you’d think we would hunker down like some economic doomsday preppers, feeding off bulk cans of baked beans and Tom Piper stew (do they still make that? A staple of my student days!) stored in locked suburban garages? But no, we continue spending on dining, drinking, entertainment and travel. And according to these predictions, we’re going to spend even more. Somehow, we’ll find the money.

Is there something of the Australian psyche at work here? A few years ago, I had a CEO role in the hospitality industry (for a wine and restaurant brand). Just after I started, the GFC hit. The US market – a key export market – stopped spending on drinking and gambling (which affected a related parent company). But the Australian market didn’t stop. It just found other ways to afford it. It’s as if we value our lifestyle – which includes the freedom to visit a pub and pay outrageous amounts for a steak and cold beer, or pay through the nose for some fancy cocktail – so highly that these things are not so much “discretionary” spending, as closer to life’s essentials.

Of course, there are a great many people genuinely doing it tough. The working wage hasn’t kept pace with costs of living for a very long time. But in the meantime, there seems a large and growing cohort of people who are sufficiently immune from economic cold winds, that they can carry on unfazed.

2023 will be an interesting year to watch what happens across the economy, given that further interest rate rises are almost certain and talk of a global recession is gathering more support. But if you thought that an industry like hospo might be vulnerable and in for another body-blow, you might be surprised at how resilient it proves to be.

Postscript: Just when there’s every reason to expect consumer confidence will take a hit, turns out the opposite is true: the Westpac Westpac-Melbourne Institute Sentiment index rose by 5 per cent in January - the largest monthly gain since April 2021.