The NSW Government has announced a further month of restrictions across Greater Sydney, including the Blue Mountains, Central Coast, Wollongong and Shellharbour. Lockdown restrictions are now expected to extend to 28 August at the earliest, after the state recorded 177 new cases on 28 July. Restrictions will likely be further extended.
Restrictions on movement and non-essential businesses, and working from home mandates are expected to have a major impact on key industries. These industries are typified by their limited ability to work from home, reliance on social interaction and classification as non-essential.
Casinos
The Casinos industry is expected to be one of the most hard-hit industries from the ongoing lockdown. The national industry is expected to be worth $4.9 billion in 2021-22, with two casinos based in New South Wales. Crown Resorts accounts for 49.8% of the industry, while The Star Entertainment Group accounts for 39.9%. Profitability for both operators has been significantly hindered by social distancing measures, restrictions on non-essential services and travel restrictions on overseas visitors. Increasing regulatory scrutiny has compounded pressures from the pandemic for casino operators in Australia.
Industry revenue is forecast to increase at an annualised 6.5% over the five years through 2026-27, to $6.6 billion. Prolonged restrictions on international travel to Australia and capacity limits on casino operations are anticipated to continue restricting the industry in the short term. However, the industry is anticipated to recover over the next five years, as governments ease restrictions, and more international VIP and premium gamblers are able to visit Australia.
Motels
New South Wales has almost 850 motel establishments and most generate less than $10 million in revenue per year. Across the state, 25.9% of motels are located in Sydney and other capital areas, while 74.1% are in regional areas. Revenue across the Motels industry declined by 33.9% in 2020-21, to $1.5 billion.
A partial recovery was expected in 2021-22, as domestic tourism activity ramps up and tourism with New Zealand expands. However, the emergence of the COVID-19 delta strain in Australia is anticipated to limit growth in the current year. In response to the worsening outbreak in New South Wales, New Zealand has closed the trans-Tasman travel bubble for eight weeks, removing a valuable source of tourism income for motel operators.
Performing arts venues
Sydney is home to the largest operator in the Performing Arts Venues industry, the Sydney Opera House Trust, which accounts for 14.9% of the industry. The industry's average profit margin will likely decline due to the latest lockdown, as periods of closure negatively affect self-generated revenue, particularly for smaller operators. Furthermore, fewer performances to smaller audiences following reopening will reduce economies of scale, which will also hinder profitability.
Revenue for performing arts venues is expected to decline by 4.2% in 2021-22, to $655.6 million. The industry is projected to expand over the next five years, as it recovers from the COVID-19 pandemic. Industry revenue is forecast to grow at an annualised 3.3% over the five years through 2026-27, to $826.2 million.
Cinemas
The latest lockdown in New South Wales is expected to be particularly devastating for Cinemas, which had previously expected to begin ramping up screenings as previously delayed blockbusters are finally released. Over 140 cinemas operate in New South Wales and close to 500 operate nationally.
Potential cinema-goers are expected to continue turning to home-streaming options as lockdowns persist. This trend represents a long-term threat, as consumers potentially forge new viewership habits outside of cinemas. Major studio Warner Bros has previously announced a new release strategy, where major productions such as the forthcoming Dune epic will be available for online streaming on the same day they begin showing in cinemas.
Gyms and fitness centres
New South Wales has over 2,360 gym and fitness centre establishments. Across the regions in lockdown, operators in the Gyms and Fitness Centres industry are expected to completely cease operations for at least the next month, and likely longer. Prior to the latest lockdown, the industry was expected to display strong growth of 11.6% in 2021-22. However, a decline in revenue is now anticipated amid the latest restrictions.
Some operators are expected to successfully transition to online classes and personal training in outdoor settings to preserve a share of their normal operating revenue. Younger demographics are more likely to take up online industry services, which have increased as a share of revenue during the COVID-19 pandemic. Over the next five years, a small portion of consumers may stay with substitutes they pursued during gym closures, such as home equipment and fitness apps. However, most members that were active before the lockdown are anticipated to return over time.
IBISWorld reports used to develop this release:
- Casinos in Australia
- Motels in Australia
- Performing Arts Venues in Australia
- Cinemas in Australia
- Gyms and Fitness Centres in Australia
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647
Email: mediarelations@ibisworld.com
