A West End playhouse is to be turned into a "hangout" for actors and audiences with hi-tech seating that disappears after each performance to create an open-plan entertainment area.

An ambitious £20million overhaul of the 81-year-old Arts Theatre - where modern classics such as Waiting For Godot and The Caretaker were first performed in London - will see it turned each evening into a late-night lounge in the style of the Groucho Club.

The plan, masterminded by multimillionaire property developer Laurence Kirschel, is currently being scrutinised by Westminster council.

If approved, the crumbling theatre will be transformed after struggling financially in recent years.

The 317 seats would retract hydraulically after each performance to leave an open-plan floor space.

Mr Kirschel hopes it will be used by theatregoers, actors and other theatreland workers to meet and socialise. The scheme includes proposals for what would be, at 23 metres, theatreland's longest bar, as well as a restaurant and 65-bedroom hotel.

In a rare interview, Mr Kirschel told the Evening Standard: "The reason that theatres don't make money is that they are closed more often than they are open. We would look at how we can transform the space into a useful area when it is not being used for a show.

"We found this technology that allows seats to sink underground, and from that possibility grew the concept of a lounge.

"What we wanted to create was akin to a Soho House or a Groucho Club for theatregoers, thespians and other people involved in the industry. It would become the after-show lounge where actors and people working back-stage could mingle. One idea is that a ticket to a West End show would include entry to the lounge."

Mr Kirschel, who has trained as an actor, said the venue's two long bars would be in contrast to the cramped bars of many West End theatres.

He said: "There is still this difficulty in getting a drink in the interval either if it is ordered before the start and you have to drink it at a tiny table, or if you have to rush to the bar where there is normally only one lady not properly qualified to serve 300 people."

Mr Kirschel's company, Consolidated Development, bought the north side of Great Newport Street, where the Arts Theatre is situated, for £6.89million. If the scheme gets the go-ahead it is expected to be finished by January 2011.

• 

  Sex, lies and the Stasi

  On this day in 1989 the Berlin Wall was finally breached, ending the reign of East Germany’s feared security service. Here Anne McElvoy, who spent much of the Eighties in the city, recalls her encounters with the spooks

  ---

• 

  The geeky-girl solo artists descending on the music scene

  Kookiness is what sells music these days and these opinionated artists have it in spades, says Jasmine Gardner

  ---

Why Sam's in the clear over that M&S dress

At last the truth about the M&S spotted dress that Sam Cam wore to the Conservative Party Conference

All stories