Pink pound dries up as recession begins to bite

Popbarz, the owner of celebrity haunt Ghetto, had faced a "significant downturn in trade" which left it "suffering" during the economic downturn, according to Andrew Rosler of administrators Ideal Corporate Solutions.

Ghetto moved from Soho to Old Street last year, and attracted stars including Kate Moss and Rupert Everett. It was run by Tommy Moss and the late Simon Hobart, who transformed London's gay club scene when he opened Popstarz in 1995.

When the club moved to Old Street, Moss said he was "sorry to be leaving Soho", but had no choice due to "soaring rents and dwindling venues".

Today Ghetto was still trading as the administrators look for a buyer, but a Brighton branch of the club had already been closed.

Figures from the Gay Business Association (GBA) suggest the group's demise is part of a larger trend. It said the number of London gay bars is down from 250 five years ago to 150 today.

Although the recession has fuelled the decline, the shift to socialising online has also been key, according to Stephen Coote, director of the GBA.

He said: "Dating and cruising, which the community used to do in gay bars, is now done online.

"This started happening long before the recession — the gay market was an early adopter of new technology.

"But during the downturn the trend accelerated. People are spending less on entertainment, and that has hit businesses in Soho and Vauxhall hard."

Coote said gay bars and clubs are now being forced to offer straight nights.

"Thirty years ago, straight bars would open their doors to the gay community on Monday, the quietest night. Now it has gone full circle.

"I expect more of the community's bars to open to the broader market."

The "increasing acceptance" of the gay community in Britain has also hit its entertainment industry, according to Ian Johnson, chief executive of gay market research agency Out Now.

He said there was now "less of a need for community-specific bars and clubs".

Johnson added that London had not done enough to promote its attractions to gay tourists.

"Anecdotal evidence suggests gay travel to the UK has decreased this year. Cities like Berlin and Helsinki have done much more to promote gay communities to bring in visitors.

"Gay bars and clubs are assets that London should be using to attract overseas travel."