Melbourne hospitality sector ‘fighting for life’ amid remote work shift
Melbourne’s late-night hospitality sector is in crisis, with industry veterans warning that the shift to remote work has severely diminished weekday trade and put immense pressure on city venues.
Publican Tracey Lester, who recently sold the Carlton Club and Windsor Castle Hotel after both fell into insolvency, said weekday foot traffic had collapsed since the rise of hybrid work arrangements.
“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 said. “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, a 30-year veteran of Melbourne’s hospitality scene, said rising costs—especially insurance and licensing fees—were compounding the pressure on venues.
Bar owner James Young echoed the concern, describing the industry as being under “immense pressure” and criticising the City of Melbourne for failing to spearhead a post-pandemic recovery strategy.
“They had the opportunity to show leadership, to set the ‘come back to Melbourne’ agenda,” Young 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.”
Young, who has closed three venues since the pandemic, cited skyrocketing insurance premiums—up 600%—and alcohol taxes as key challenges. “We’ve got to charge abhorrent prices for our drinks,” he said.
Others, including Greg Khan and Maz Salt, pointed to falling trade on Fridays, overregulation, and mounting operational costs. “We are over regulated in every aspect of our industry – over taxed, over charged, under represented and overlooked,” Salt said.
Victorian Chamber of Commerce and Industry’s Scott Veenker advocated for renewed investment in business tourism, saying, “Hybrid work policies must find balance. Melbourne’s CBD was never designed to be half full.”
Australian Restaurant and Cafe Association chief executive Wes Lambert reported up to 30% revenue drops from pre-COVID levels. “Demand for restaurants and cafes has remained flat since 2023,” he said.
In response, Lord Mayor Nick Reece maintained that Melbourne remains the “best place to do business” and pointed to rising foot traffic, low retail vacancies, and an uptick in new businesses as signs of recovery.
“We’re supporting businesses to open and expand through our free Business Concierge service... and continuing to deliver a blockbuster calendar of events,” he said.
Jonathan Jackson, 24th March 2025
