Central London's hospitality sector shows signs of recovery: report
Closures have started to slow down.
Central London's hospitality sector is displaying signs of recovery after enduring the closure of numerous licensed premises during the tumultuous period of the COVID-19 pandemic, as per the latest Hospitality Market Monitor by CGA, in partnership with NIQ and AlixPartners.
Research conducted for the report reveals that between March 2020 and March 2023, central London witnessed a net decline of 540 licensed premises. This figure accounts for 15.6% of the city's pre-COVID total, equivalent to one closure every two days.
The significant toll on London's hospitality industry reflects its heavy reliance on commuters, domestic visitors, and international tourists. With millions of individuals working remotely and travel restrictions in place throughout 2020 and 2021, numerous pubs, bars, and restaurants, particularly independent establishments, faced unsustainable circumstances.
However, the return of office workers and visitors since 2022 suggests that the downward trend may be stabilizing. The Hospitality Market Monitor indicates that London experienced a net decline of only 1.0% of its licensed premises in the first quarter of 2023, following a slight decrease of just 0.2% in the fourth quarter of 2022.
The positive outlook is reinforced by data from the Coffer CGA Business Tracker, which indicates that year-on-year sales growth for managed operators within the M25 has been approximately twice as high as the rest of Britain during the initial months of 2023.
London's city centre stands as the UK's most concentrated and significant market for the hospitality industry, housing nearly 3,000 licensed premises—more than the combined total of the six next largest city centres in Britain.
Karl Chessell, CGA's director for hospitality operators and food, EMEA, expressed his optimism, stating, "This slowdown of closures is a very welcome sign for London's hospitality scene, which was disproportionately hit by COVID lockdowns and working from home. London businesses still face some daunting challenges including high inflation and labour shortages, and more closures can be expected—but it's clear that the sector is back on its feet."
Graeme Smith, managing director at AlixPartners, shared his insights, saying, "This stabilization of such an important hospitality market is encouraging and clearly underpinned by a return of significant footfall to central London. We may see ongoing closures as more vulnerable and indebted businesses succumb to the demanding trading environment. However, we know that London remains a highly attractive market in the longer term, for strong operators with well-defined and differentiated propositions. As inflationary cost pressures ease, we would expect to see the capital return to site growth—possibly as soon as the third or fourth quarter of this year."
