How does the cost of living crisis impact the hospitality sector?



The hospitality industry is a vital part of the Australian economy. It employs millions, generates billions of dollars in revenue, and contributes to our country’s economic growth.

Here are six reasons why the hospitality industry is vital to the economy:

  1. It creates jobs. The hospitality industry is one of the largest employers in Australia. It employs over 2 million people or 10% of the workforce. These jobs are spread across various occupations, including food and beverage service, accommodation, tourism, and event management.
  2. It generates revenue. The hospitality industry generates billions of dollars in revenue each year. In 2021, the industry generated $170 billion in revenue. This revenue is generated from various sources, including tourism, business travel, and major events.
  3. It contributes to economic growth. The hospitality industry is a significant driver of economic growth. It contributes to economic growth by creating jobs, generating revenue, and stimulating other sectors, such as tourism and retail.
  4. It attracts investment. The hospitality industry attracts investment from both domestic and international investors. This investment helps to create new jobs, generate new revenue, and support economic growth.
  5. It promotes innovation. The hospitality industry is dynamic and innovative. It constantly looks for new ways to attract customers and improve the customer experience. This innovation helps to drive economic growth and create new jobs.
  6. It enhances Australia’s image. The hospitality industry helps to enhance Australia’s image as a desirable destination for tourists and business travellers. This positive image helps to attract investment, create jobs, and generate revenue.

The Cost of Living Crisis and Its Impact on Hospitality Venues

The cost of living crisis is having a significant impact on hospitality venues in Australia. The rising cost of food, energy, and labour makes it difficult for these businesses to operate profitably.

Some hospitality venues feel forced to raise prices, some reduce staff hours, and others cut back on services. Unfortunately, these measures harm the customer experience and lead to a decline in business.

Solutions to the Cost of Living Crisis

Several solutions can be implemented to help hospitality venues cope with the cost of living crisis. These solutions include:

  • Looking at increasing productivity. There are many ways to increase productivity, from refining systems and processes to increasing staff morale to attracting and retaining talent.
  • Collaboration. Hospitality venues can collaborate with others to share resources and reduce costs. For example, venues can share food suppliers to get discounts and staff to help support peaks and troughs in trade. Share marketing costs by setting up food trails and food shows. This also attracts visitors and tourists.
  • Innovation. Hospitality venues can innovate to find new ways to reduce costs and improve the customer experience. For example, venues can use technology to automate tasks, reduce waste, and improve efficiency. Software systems can be implemented to reduce time writing and calculating rosters, and an outsourced organisation can manage compliance documentation.


The hospitality industry is a vital part of the Australian economy. It is essential to take steps to ensure that this industry remains strong and vibrant. The cost of living crisis is a significant challenge facing the hospitality industry, but many solutions can be implemented to help businesses cope. With productivity improvements, collaboration, and innovation, the hospitality industry can continue to play a leading role in the Australian economy. Thinking creatively and working holistically with hospitality clients is EMPOWER Agency’s speciality. Contact us today for a chat to see how we can help.