Many influences can impact the sustainability of hire and rental companies, and in particular, portable toilet rentals in 2019.
These influences can either be internal drivers or external drivers. Internal drivers are the kind of things that we can control (e.g., organisation structure, employee retention) and external drivers are the kind of things we cannot control (e.g., competitor’s activities, customer demand).
In the below blog, we take a closer look at the key external drivers that are affecting the profitability of portable toilets rentals in 2019.
Demand from Construction
The first key external driver is demand from construction. Most site projects require portable toilets, as access to traditional toilet blocks can be scarce due to limited sewerage networks and plumbing networks. As a result, any decline in construction activity can negatively impact the demand for portable toilets.
Over the past five years, there has been a significant slump in mining investment and non-road infrastructure which has contributed to a downward trend in total construction activity and portable toilet rentals. While the mining sector is now slowly on the improve (due to the falling Australian dollar and increasing mineral prices), the construction division is expected to decline further. This is predominantly because of the fall in residential building construction, which has been influenced by consumer sentiment and tight credit. Overall, the demand from construction is expected to pose a threat to portable toilet rentals in 2019.
Demand from Event Promotion and Management Services
The second key external driver is demand from event promotion and management services. Event management companies often hire portable toilets to cater for the large volume of attendees at things like sporting events, festivals, and food shows. As a result, increases in event attendees can provide hire and rental companies with an opportunity to expand their portable toilet fleet.
In Australia, total expenditure on recreation and culture has climbed at a solid pace over the past five years, despite the slow growth in household discretionary income. This is because households are prioritizing to spend their discretionary income on their favourite events. In particular, there is a growing demand for culture and music festivals, with a recent survey showing that the average festival-goer visits 2-3 festivals each year. Therefore, it is expected that demand from event promotion and management services for portable toilets is likely to increase in 2019.
Household Discretionary Income
The third key external driver is household discretionary income. Household discretionary income can indirectly affect the demand for portable toilet rentals. This is because an increase in discretionary income can boost consumer demand for major outdoor events and festivals, which ultimately affects the requests for portable toilets.
It has already been highlighted that real household income hasn’t grown over the past year at all, yet consumer interest in events is increasing. That means that any increase in consumer spending is likely to be funded by ever-decreasing savings. However, it is expected that household discretionary income will increase over 2019, as a result of employment growth, a pick-up in wages growth, and healthier growth in tax payments. Therefore, household discretionary income is predicted to play a decisive role in the hiring of portable toilets in 2019.
Expenditure on Recreation and Culture
The fourth key external driver is expenditure on recreation and culture. This expenditure includes the hosting of private events and functions that require portable toilets. During periods of strong economic growth, households and businesses are likely to hold more parties and gatherings – many of which are conducted in private homes, public buildings and parks where there are limited toilet facilities. As a result, the demand for portable toilets rentals increases.
The pool of married people in Australia is also increasing each year (thanks to the “yes vote”), which ultimately boosts demand for wedding furniture and luxury portable toilet options. Therefore, it is expected that expenditure on recreation and culture will play a supportive role in portable toilet hires in 2019.
What are your thoughts? How have you seen the above external drivers affect your business?