?Leisure & Entertainment department? outsourcing or not ?

Strategic report?: ??Leisure & Entertainment department ? outsourcing or not ?

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What are we talking about??

Leisure has demonstrated its virtues to boost an asset whether it is shopping center – train station – airport – resort or city center:

More harmonious customer experience, increased dwelling time and average spending basket, customer engagement and immersion, social and cultural connection

This new entity, which has established itself in all organization charts in the Middle East or Anglo-Saxon countries, is a new leather weapon for REITs and tourism authorities

It deals with leisure equipments (brands, operators, infrastructures) and operational marketing ?( entertainment dedicated to retail also called "Retailtainment")

If there is no more debate about its efficiency, the point is : should we outsource it or not ?

What's the point?

The objective is to have an autonomous business unit internally and a one-stop shop for external partners involved

The leisure offer has become plethoric with a sector that has federated and professionalized at all levels:

Pure player brands are born in all segments with a strong trend towards active leisure such as :

Ifly

Walltopia

Gravity

Flowrider

Management companies are involved as well

Merlin entertainment is one of the world leaders with flagship achievements such as Sea World

Othium Leisure in Europe is taking over the lead with exclusive concepts such as

Fort Boyard

In addition to these operators are grafted activations and energizing events, it is the Retailtainment

These events are thriving in commercial venues with a wild range of activities i:e

Exhibitions

Calendar celebrations

Culture

Sport

Foodtainment

Managing such diverse universes requires a dedicated top management

?2. How to raise the challenge

The enrichment of the leisure offer and the multiplication of increasingly complex events generates immersive experiences acclaimed by customers and transform real estate and tourism assets into genuine destinations

The counterpart of this phenomenon is a major overload of the coordination tasks devolved to the site management team in charge of numerous tasks:

Feasibility studies (technical, financial: P&L – Opex - Capex, lay out)

Proces (call for tenders, customs clearance, hanging over, security committees)

Logistics with equipment’s to install, maintain, secure and store

Risk and compliance (reception of the public, handling of cash from revenues, insurance)

Communication (website – social media- community management -OOH) with all third parties involved in addition to the corporate team

Marketing with operations departments at the heart of events 7/7

Accounting with high level financial arrangements: rents, royalties, ticketing, revenue sharing

Legal with multiple options: Joint venture, master franchise, operating company

The "Leisure & Entertainment" departments are in charge of steering these actions and coordinating internal and external actors.

Why is this essential?

We have just listed the wild range of the task and the complexity of the process to succeed in implementing successfully a corporate leisure and entertainment strategy

Traditional organizations are not staffed to absorb this over workload

There are many reasons:

The departments in charge of a project from A to Z are multiple:

Concept proposal: site management or corporate marketing

Approval: asset manager – head of operations – tenant association– center management – marketing manager - supervisors

Delivery of a venue: tenant coordination -Leasing – speciality leasing – center management

Opening : safety commission – center management – supervising office

Management on the floor: brand or tenant – event company – management – Ad Hoc JV – managing company

This multiplication of actors makes that the decision-making processes takes too much time for activations that are often opportunistic and where it is necessary to be very reactive.

This lack of a "one-stop shop" makes the task complex and sometimes dissuasive for brands and operators

Events require non-integrated expertises

When it comes to technical services such as for food (Master chef) – art (exhibitions – Street art) – culture (conferences – workshops debates) – science (virtual animations by mapping or holograms) or sport (aerial courses – Ninja warrior) site management does not have the expertise to carry out arbitrations or cover operating risks

This issue often dissuades the raise of amazing projects too difficult to implement or just not addressed by the core business of the company

Another phenomenon: the growing role of trademark licenses (IP) that drive the leisure market such as Marvel – Mattel or Nickelodeon

Negotiating with these giants of the sector requires a strong financial base and specific expertise most of time outsourced with pure players from the franchising and licensing world

4. Which organizational model ?

In the Middle East, "Leisure & Entertainment managers" are already running the business and often preside over marketing and event strategies

In the United States, leaders such as Triple Five Group manage internally as well to deal with a leisure offer representing up to 50% of the brand's merchandising mix

Europe is not organized this way

The main difference is that there is not a a hierarchical link with integrated real estate department

Promotors are not on same time investors – promoters – lessors - marketers – managers

There is no private or public organization playing the same wholistic role than Seven in KSA for example

The only one almost organized this way are the REIT from distributors such as Mercialys – Carmilla – Nood or Marjane Holding in Morocco

They have enough assets and staff to internalize the leisure & entertainment department

The issues are more related to the DNA and core business

Therefore, outsourcing is still strongly practiced in terms of leisure and animation

5. Internal department or outsourcing ?

The answer seems to be linked to the typology of the real estate company that manages your asset portfolio

It seems logical that the more numerous assets and staff you manage the easier it is to manage an in depth ?Leisure & Entertainment" department

However, our analysis has demonstrated that it is still considered as risky and technical enough to be managed by third operators

The easiest way is to hire an internal leader (Leisure & Entertainment manager) who will lead a partner consulting firm (leisure strategy consulting company) or will manage personally third operators and internal resources

For smaller operators or with a core business too far from the business (hotel – travel retail – development agencies – tourism organization ..) outsourcing is a must

About the autor

Gilles Devendeville worked 25 years at C Level in the largest real estate companies in EMEA (Nood – URW – Metrovacesa – Centum Holding - Abu Dhabi Investment Authority) as well as within the Lucien Barriere group of resorts

MBA, speaker, author, board advisor for leisure – Food - Retail & Resorts brands and master franchises

He created and manages in Europe Real Consulting (leisure and entertainment strategy consulting firm) which "transforms assets into destinations" on behalf of real estate and tourism organizations Accueil - Real Consulting BLM

He is the founder as well of The Leisure Factory based in Morocco in charge of the expansion of retail and leisure brands in Africa and the Middle East.

Real Consulting is a major player in Leisure & Entertainment outsourcing in Africa

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