While the index highlights key cities that may prove particularly attractive in general terms for expanding operators based on fundamentals related to size and spend, there will be cultural nuances and market specifics that may move certain cities further up, or down the agenda, dependent on the requirements of the operator in question.

Operational pressures, particularly those around staffing and rising energy costs, and which are seen to varying degrees across different markets at present, have become particularly acute in New York and London. For some, this is generating downward pressure on profit margins. As a result, over the short term, New York and London are likely to prove most attractive to high-end and quick-service restaurant concepts and for leisure concepts with limited staffing requirements.

However, some of these upward cost pressures are being offset by property cost savings. In the case of London, on average, rents and other terms offered to prospective tenants have rebased from their pre-Covid levels, albeit this is largely dependent on precise location/ unit specifics. As a result, there is a growing realisation amongst occupiers that now may be the opportune time to enter into or expand in the London market, to capitalise on the current reduced rental costs and attractive landlord incentives. This is reflected in recent leasing activity. For example, London saw 17 new international F&B concepts make their UK debut in 2022, with an additional 14 new entrants with sites already secured and due to open in 2023.

In the case of the high-ranking Asian markets, notably Seoul and Tokyo, while the market fundamentals look particularly strong, cultural nuances mean the opportunity for new international entrants into those markets can be muted and is likely to be concept specific. There is likely to be a broader global appeal to those concepts coming out from those markets, which is being witnessed by our agents in London who have seen unprecedented demand for space from operators originating from the Asia-Pacific region.

Ninth ranking Dubai is an attractive market based on the affluence of its residents, propensity for leisure and its growing tourist appeal, although, it would appear relatively well served for leisure per capita against its global city peers. However, Dubai’s major appeal is likely to lie in its role as a launch pad into other Middle Eastern markets. It is still the primary location in the region for new international entrants and a place where franchise partnerships can be forged, partnerships that could lead to further expansion in the region. Riyadh is fast becoming another first stop for international brands operating in the region with a local partner.

All the major gateway cities globally will present as attractive opportunity markets, more so than others dependent on the concept in question. But, perhaps the best ‘real’ opportunities for international expansion over the short to medium term is likely to be delivered by the smaller European gateway cities and those markets in North America beyond New York. London and New York should, and will, remain top of the agenda, particularly for those concepts wanting to build a global profile.

Yet, these markets continue to be particularly competitive, and we suspect that for some concepts/operators smaller European and North American cities may move up the agenda as a result.

And while these cities may be relatively smaller, they can still deliver on the fundamentals. For example, European cities like Dublin and Vienna, with populations between two to three million, have the highest per capita spend on eating out across all the major European cities. While in the US, San Francisco, with a population of 4.6 million, has the highest per capita spend on eating out across the major cities in the country (we will be providing a deeper dive into F&B opportunity markets in Europe, North America, Asia and the Middle East in the coming months).

For expansive leisure and F&B concepts looking at new international markets, understanding the fundamentals in terms of market potential will be key. But it will be the nuances related to micro-location and property specifics that will be vital to realising international expansion aspirations.

_{Read the articles within Savills Global Leisure Cities Index 2023 below.}