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White Hutchinson Leisure & Learning Group, Kansas City, MO, USA

The premiumization of location-based entertainment

Premiumization refers to elevating products, services, or experiences to a higher quality, offering both luxury and exclusivity.

We have discussed at length in this enewsletter the increasingly bifurcated landscape of the out-of-home leisure market, including location-based entertainment venues (LBEs). College-educated, higher-socioeconomic households have steadily grown to make up a larger share of out-of-home entertainment spending, now accounting for three-quarters of all fees and admissions. The K-shaped economy is further bifurcating out-of-home leisure and entertainment. The upper middle class and the rich, in the upper arm of the K, are now 35% of all households and account for the vast majority of discretionary spending. The core middle class is no longer the target market.

The bottom line

The core market for LBEs is no longer satisfied with mediocre experiences. These consumers have countless free or nearly free digital entertainment options available to them at the touch of a button, in the comfort of their own homes. If they put in the effort to leave their home, drive somewhere, and part with some of their money and limited leisure time to be entertained, they want the experience to be better than mediocre. They want it to be premium, special, and exceptional. They want to spend their discretionary money and time on a premium experience.

The implications for LBEs

Consumers who can afford it are seeking something special and premium, and higher socioeconomic consumers are willing to pay more for it. This is good news for leisure and entertainment venues that have taken our advice and targeted higher socioeconomic consumers by offering a premium experience through their furniture and finishes, entertainment offerings, food & beverage, and guest services.

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