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It's wait and see as new congestion zone looms

25 January 2007 by
It's wait and see as new congestion zone looms

In less than a month's time, London's £8 per day congestion charging zone will spread westwards to include Chelsea, Kensington, Knightsbridge, Belgravia, Notting Hill, Bayswater and Pimlico. Kerstin Kühn reports on the impact this is likely to have on hospitality businesses in the area

The congestion charge is a subject that provokes heated debate whenever it's raised, and from 19 February, west London will be in the spotlight.

While it's difficult to predict exactly what impact the charge - which operates between 7am and 6pm - will have, experts suggest hospitality businesses will have a similar experience to their central London counterparts.

"The central London congestion charge had an immediate effect on the restaurant business," said Martin Couchman, deputy chief executive of the British Hospitality Association (BHA). "It particularly affected restaurants offering pre-theatre menus, as people were reluctant to come into central London before 6.30pm.

"There are a lot of restaurants in west London, and the extension is likely to have a similarly dramatic impact on them. People who would have driven to the area for lunch or an early dinner are now a lot less likely to do so," he added.

Staffing levels

Statistics from the London Chamber of Commerce, released in 2004, suggested that nearly 80% of restaurants within the central London congestion zone reported a drop in customer numbers, with 43% reducing their staffing levels. More than a third (35%) said they were thinking about relocating, and a fifth were considering closing their business as a direct result of the congestion charge.

Couchman warned that hotels are also likely to suffer as driving customers will have to pay the congestion charge on arrival and departure and may choose to stay further outside the zone.

West Londoner and hospitality industry consultant David Tarsh, who has been campaigning against the scheme, agreed. "The scheme is flawed on every level," he said. "And with the implementation costs of £165m stacked up against a net revenue as low as £10m-£30m a year, it will take the better part of a decade to bring any returns."

Pointing to a study by the Centre for Economics and Business Research, Tarsh warned that hotels and restaurants faced losing up to £96m in revenue and up to 2,730 job cuts.

But despite the grim predictions, operators in west London are fairly sanguine about the introduction of the charge.

Kirsten Falk, general manager at Kensington Roof Gardens, doesn't foresee any major impact on footfall. "The vast majority of our customers travel to us either by taxi or public transport," she said. "At lunchtime we primarily serve people from local offices, and in the evening we only open for dinner at 7pm, after the congestion charge ends."

This view was echoed by Sofia Vandaele, hotel manager at the Sheraton Belgravia, who said that fewer than 10% of guests drive to the hotel.

Main concern

"We're not anticipating a reduction in visitor numbers and our main concern is to make sure that we uphold our duty to inform our guests of the implications of the congestion charge," she said.

But while businesses in west London remain positive that customer numbers won't be affected, one area of concern is an increase in suppliers' costs.

Couchman said this was an inevitable consequence of the scheme. "Suppliers are more than likely to charge restaurants extra for their deliveries," he said. "And if a restaurant has a number of different suppliers delivering goods throughout the day, this will undoubtedly increase their costs quite significantly."

Small suppliers, which have only one or two deliveries to make in the area, are most likely to increase prices, according to Simon Henrick, spokesman for Brakes, one of the UK's largest food suppliers.

Falk said Kensington Roof Gardens might have to consider changing suppliers and look more locally if costs go up significantly.

Underestimated

The majority of hospitality businesses in west London appear to be planning for the charge, but Tarsh warned that many have underestimated its potential impact.

"Many people aren't aware of the full impact the congestion charge will have," he said. "I recently decided not to book the Belvedere in Holland Park, where I'm a regular customer, for a business lunch next month for precisely this reason. The restaurant will never know this, but I'm sure I won't be the only one."

Whether the majority of customers follow Tarsh's lead remains to be seen, but hotels and restaurants in west London will be checking the books closely in the next few weeks to find out whether Mayor Ken Livingstone's flagship scheme has hit their bottom line.

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