On a hire note
Foot-and-mouth, the events of 11 September and the worldwide economic slowdown - these are body blows which have floored the hospitality industry in London, and from which the capital may take many more months to recover fully.
Yet long-range forecasts look promising. Consultancy Volterra says 150,000 jobs will be created in the hotel and catering industry in London by 2016, as the capital continues to slug it out with New York, Tokyo and Paris to grab international business and the attentions of the world's travellers.
The hospitality industry is hugely important to London. Hotels and restaurants alone make up 4% of the capital's economy and employ 6% of London's workers, according to the Centre for Economic and Business Research (CEBR). Hospitality business adviser PKF estimates that the wider tourism industry earns the capital £9b each year and keeps 275,000 people in work. The mayor of London, Ken Livingstone, says tourism and hospitality have combined with retail to form the city's second-largest industry. Only financial services play a bigger part in London's wealth creation.
Knockbacks
The various national and international crises, however, have left the industry wounded. PKF says occupancy levels in London hotels fell by 9.7 percentage points last year, dropping to 72.9% - the first time they have fallen below 80% in eight years. Room yields in the centre of London fell by 13.8% to £81.41. Outer London hotels, which rely less on international business, fared slightly better, with room yields dropping by just 2.7%.
The CEBR says gross domestic product for the hotel and catering industry in London shrank by 1.2% last year, and will grow by only 0.5% this year. Its economists say continuing international tension and a glut of bars and restaurants will continue to keep growth low. They're forecasting a rise of just 1.5% in 2003. In contrast, London's overall economy is expected to grow by 2.4% next year.
But the industry is fighting back - with help from local government. The mayor, leading travel industry figures and the London Tourist Board launched a £1m marketing drive in a bid to attract more British holiday-makers to the capital this summer. It was the third major promotional push since 11 September, and initially appeared to be a success.
Occupancy rates showed an increase of 1.1% in May - the first annual rise in the capital since January 2001. But the World Cup and the Golden Jubilee knocked the industry sideways in June - leading to the worst occupancy rates in London since 1993.
PKF is now expecting a recovery in occupancy by the end of this year - although room rates may have to be cut to achieve it. Its hospitality advisers say this will "provide a platform for a solid comeback in 2003 and beyond".
And hoteliers may be able to create their own feel-good factor in the next few years. Consultancy EC Harris says a string of high-profile hotel openings in London in 2002 will "restore morale and focus good news on the London market".
Meanwhile, local business groups such as the London Chamber of Commerce, the local CBI and lobby group London First have all called for a new strategy to develop the tourism and hospitality industry in London. Their aim is better standards for hotels, and more staff training. The mayor's Economic Development Strategy also aims to develop London as a world business centre and European business capital.
The cost of living in London
According to the Centre for Economic and Business Research, the average London worker earns 30% more than the national average. Even when the capital's higher prices are taken into account (Londoners pay 13% more for life's essentials), a typical worker still enjoys a standard of living that's 10% higher than the rest of the country.
But those higher prices have a much bigger impact on London's low-paid staff. The biggest cost is housing - which is on average 56% more expensive in London. For those who rent, the good news is that rents have slipped or stalled this year, although this is being described as a blip. Those who own their own homes are likely to see their values rise still further.
