With the recent acquisitions of The Breakwater and the Newport, Perth-based hospitality group Capitol Corp is continuing to diversify its offering.
After more than a decade owning nightclubs, Capitol Corp chairman David Heaton is all too aware of the fickle nature of the hospitality industry.
Mr Heaton’s Capitol Corp entered the market around 10 years ago with the acquisition of Metropolis Fremantle, and just three years later added Amplifier and Capitol to its portfolio.
Soon after the Amplifier-Capitol purchase, Mr Heaton established The Edison at the Murray Street venue, a move that set the scene for the group’s first foray into small bars in 2014 with the opening of Bar de Halcyon down inner-city alley Wolf Lane.
By 2016, Capitol Corp had sold out of the small bar, after the challenges of Perth’s hospitality scene took a toll on the company.
“Halcyon was hard work,” Mr Heaton told Business News.
“Small bars are very challenging, because the expectation of a customer that goes to a small bar is extremely high.
“They expect their cocktails to be on point, the beer to be cold and the food to be almost fine dining level.”
Mr Heaton said the introduction of small bars in Perth had clearly been positive for punters, but for hospitality groups such as Capitol Corp, jumping on the small venue bandwagon had proved to be one step too far.
After selling out of Bar de Halcyon, which was subsequently rebranded as The Spaniard, Mr Heaton shifted the focus of Capitol Corp to the tavern scene, leading to the acquisition of The Lookout in Scarborough, and the more recent purchase of The Breakwater in Hillarys.
Capitol Corp is also adding another tavern to its lineup of venues in Fremantle’s Newport Hotel, a transaction Business News understands is due to settle early this month.
“There has been an oversupply of small bars, and there has been a bit of a rationalisation of the small bar scene that is still going on,” he said.
“People want to check out new things, and with a new small bar opening practically every week since they implemented the licence, there’s a lot of choice and a lot of things to see.
“But I believe a bubble was created, and now people are going back to larger venues.
“Although having said that, a lot of larger venues haven’t survived in their current form.”
Mr Heaton said that Capitol Corp’s small bar foray led him to realise that to survive in Perth’s contemporary hospitality market, a tavern or a nightclub needed to establish a significant point of difference.
“That was the reason that we put in the bowling at The Lookout – to differentiate ourselves from every other pub or tavern on the coast,” he said.
“When people are looking at all the bars in Scarborough and deciding which one they are going to go to, the main difference could be ‘that one’s got bowling’.
“We’ve all got sunsets, we’ve all got the beach, we all have music and we’ve all got DJs.
“It’s just a big differentiator and for every dollar that’s spent on bowling, $2 is spent on food and beverage.”
Mr Heaton said while Capitol Corp was always looking for acquisition opportunities, its main focus would be on ensuring the entertainment offerings at its venues was relevant to each the specific demographic of each premises.
For Amplifier-Capitol, that means more bands, while he said the focus at Metropolis Fremantle would be on ensuring it was the best nightclub offering it could be by upgrading its sound systems and adding a laneway container bar.
“In regards to artists, you take a venture capitalists point of view and you try and get as many as possible and hopefully you hit a few winners,” Mr Heaton said.
“It’s not an exact science, because if it was, then everyone would be doing it.
“What I’ve learned in the last few years is that the venue does have a bit of a bearing over ticket sales.
“People say ‘I like that artist, but do I want to go to that venue?’
“There is definitely some synergy between the venue and the artists.”
Mr Heaton said the other big change in the market following the introduction of small bars was the influence that social media can have on a venue’s success.
“We’re in the information age, and our biggest shift was to move away from traditional media in terms of radio ads and things like that and to move online and into social media from a marketing point of view,” he said.
“That was the first wave of change, the next wave of change is trying to meet the expectations of millennials.
“Millennials live online, they have a lot of choices, they communicate to a broad audience very easily and quickly and you’ve got to recognise and deal with that.”
Coincidentally, the influence of social media is also looming as a significant challenge for Capitol Corp.
In late January, Mr Heaton issued a public apology to his staff after female employees were told they were no longer able to wear standard t-shirts to work at the venue, instead having to don a more revealing top.
Several bands cancelled gigs at the venue in the wake of the uniform gaffe, and it remains to be seen if it will be a long-term detriment to the group.
