Hospitality veterans say working from home has left Melbourne ‘fighting for life’

Melbourne late-night hospitality veterans say one major post-Covid development has left the CBD “fighting for its life” as traditional Thursday and Friday drinks become a thing of the past.

Melbourne late-night hospitality veterans say working from home has left the CBD “fighting for its life” with traditional Thursday or Friday drinks a thing of the past.

A former City of Melbourne ‘night mayor’ has also rounded on the council, saying it has comprehensively dropped the ball when it comes to setting a “come back to Melbourne agenda”.

The dire warning and stinging criticism follows the closure or financial collapse of a slew of high-profile venues including award-winning bars Bar Margaux and The Everleigh, late-night CBD spot the Carlton Club and live-music hub The Gasometer Hotel.

Veteran publican Tracey Lester, who was forced to sell the Carlton Club and the Windsor Castle Hotel last month after they toppled into insolvency, said a Covid-inspired shift to working from home had crippled her venues.

Her venues have hosted some of the world’s most recognised DJ’s and celebrities from Lenny Kravitz to Lady Gaga.

“The shift to flexible working has fundamentally changed weekday foot traffic, particularly in the evenings, with Thursday and Friday night drinks no longer a mainstay for city venues,” Lester, who has worked in hospitality for 30 years, told the Herald Sun.

Tracey Lester has worked in the hospitality industry for 30 years.

The iconic Windsor Castle Hotel near Chapel St.

“Businesses built around the rhythms of the nine-to-five workforce are now grappling with shifting consumer behaviours, and when combined with the cost-of-living crisis, the hospitality industry is fighting for its life.”

Lester, who has previously operated venues including the Builders Arms Hotel and The Gertrude Hotel in Fitzroy, said rising costs including licensing fees and insurance made it almost impossible for venues to survive.

“Melbourne’s hospitality sector needs meaningful support and innovation to adapt to this evolving landscape and ensure the city remains a vibrant and thriving destination for both workers and visitors alike,” she said.

Melbourne bar owner James Young, whose stable of venues include the famed Cherry Bar and Yah Yah’s in Fitzroy, said if someone of Ms Lester’s experience was struggling, the industry was clearly under immense pressure.

“She’s one of the most respected professionals in the industry and has been for a number of decades – clearly there’s something wrong if her venues can’t succeed,” Young said.

Young, who was the first chair of the City of Melbourne’s Nighttime Economy Committee, said the council had comprehensively failed to support the city’s after-dark hospitality offering post Covid.

Melbourne’s office vacancy rate remains the highest in the nation five-years on from Covid.

“They had the opportunity to show leadership, to set the ‘come back to Melbourne’ agenda,” he said.

“But instead they chose to stay in their PJs and drink margaritas at home, to play the violin while Melbourne was burning after the hideous lockdowns.

“I’ll never forgive them for being responsible for destroying the City of Melbourne economy via Zoom.”

Young’s stable of venues include the famed Cherry Bar and Yah Yah’s in Fitzroy. Picture: Mark Stewart

Yah Yah’s on Smith St in Fitzroy. Picture: Ian Currie

Cherry Bar on Little Collins St in the CBD. Picture: Ian Currie

Since Covid, Young has been forced to let go of three of his five venues, including Hotel Westwood in Footscray.

“Covid was not a one or two year interruption,” he said.

“To people in hospitality, five years later, we are still feeling the sting.

“At Cherry, we’ve really felt the pain of the City of Melbourne’s numbers being down. It used to be all about location and we had thousands of people walking past the front door and naturally enough (came in),

“We’ve now had to reinvent ourselves as a destination. We’ve had to work harder to give people a reason to come.”

Young said the death of foot traffic had come as venue costs had soared amid a wider cost of living crunch.

Insurance was a new business killer – his premiums have soared by 600 per cent in recent years.

“We couldn’t believe it … went up from $50,000 a year to $350,000 a year,” Young said.

“The cost of alcohol has also gone up largely due to the government’s increasing tax on alcohol. We’ve got to charge abhorrent prices for our drinks.

“The government should consider removing the tax on alcohol for venues and restaurants, so we can serve alcohol at equivalent prices to those that you pay for at Dan Murphy’s.”

Young said ever-rising alcohol prices had seen a surge in people either pre-loading – drinking before they went out – or trying to sneak booze into venues.

“People are pre-loading worse than ever – they appear to be sober and then 15 minutes later you’ve got an intoxicated person on your hands that you’ve got to take care of,” he said.

Greg Khan owns CBD venues including The George on Collins on the city’s famed Collins St and Friends of Fire at Marvel Stadium.

Young said ever-rising alcohol prices had seen a surge in people pre-loading. Picture: Mark Stewart

Greg Khan owns CBD venues including The George on Collins. Picture: Mark Stewart

He is having to work harder than ever coming up with new ideas to attract tourists, event-goers and other audiences in the absence of reliable after-work crowds.

“The shift to remote work has notably affected Fridays, with a visible drop in lunch trade across both venues,” he said.

“Friends of Fire has been more significantly impacted due to its reliance on corporate trade from the surrounding offices.

“While we are actively addressing these challenges, every initiative we undertake comes with increasing costs.

“Ultimately, we need more foot traffic and events in the city to drive spending at our venues.”

Maz Salt, who runs boutique hospitality group Office of Public Works, said the closures of Bar Margaux, The Everleigh and The Gasometer were “significant losses” to Melbourne’s cultural economy.

“(This) is on top of the many, many more that have already closed, and the rest that are still to come,” he said.

“We are over regulated in every aspect of our industry – over taxed, over charged, under represented and overlooked.

“Every single metric of cost that we have to manage has increased and the only players that will be left (will be) national and international players with deep pockets.”

Bar Margaux announced its closure earlier this month. Picture: Supplied

The Everleigh was an award-winning cocktail bar. Picture: Josie Hayden

Victorian Chamber of Commerce and Industry committee for Melbourne chief Scott Veenker said a renewed focus on business tourism and conferences – which bring in weekday visitors – should be prioritised as a key driver for economic recovery.

“The solution is not simply to hope for pre-pandemic office occupancy to return,” he said.

“Hybrid work policies must find balance. Melbourne’s CBD was never designed to be half full. The city thrives on density, spontaneity and social interaction.”

Longer term, Melbourne should work to increase its inner-city population to support hospitality businesses. Mr Veenker said.

Restaurants and cafes in Melbourne reported revenue drops as high as 30 per cent from pre-Covid levels, Australian Restaurant and Cafe Association chief executive Wes Lambert said.

“Demand for restaurants and cafes has remained flat since 2023 with many businesses reporting that their trade has been reduced from Tuesday to Thursday,” he said.

“A 12 per cent drop in international tourist numbers do little to aid in the drop in office workers.”

Lord Mayor Nick Reece said Melbourne remained the “best place to do business”.

“We know positive incentives are more effective than forced mandates to increase office attendance and we’re working with CBD employers to get the best outcomes for them and for Melbourne,” he said.

“Foot traffic in parts of the city is the highest in nearly a decade – but we want to see our daytime economy booming across the board, including city worker activity.”

He said it was great to see companies enticing people to the office with perks like subsidised transport, wellness initiatives, lunch allowances and additional paid time off.

“We have the lowest retail vacancy rate in the country, and there were around 1100 more businesses in the municipality in 2024 compared to 2023,” he said.

“We’re supporting businesses to open and expand through our free Business Concierge service, making our city cleaner and greener, and continuing to deliver a blockbuster calendar of events.”

Originally published as Hospitality veterans say working from home has left Melbourne ‘fighting for life’