Are hen nights to blame for hard times in Manchester's Gay Village?

For those in search of a happy hour with no end, Manchester's Gay Village is certainly the place to be. "Buy one, get one free on all drinks, every day," screams a banner above the bar at Manto's, the original chic gay venue in Canal Street.

Queer Bar counters with "Drinks £1.50 every Tuesday" but neither can hold a candle to the "three for the price of one" drinks promotion which resulted in scenes of alcohol-fuelled carnage a few months back.

The value of the UK's pink pound may be higher than ever, with a collective gay income of £70bn last year, but these days not enough of it is being spent in the country's most celebrated gay district.

Revenues in Manchester's Gay Village are falling and the pursuit of customers is becominging decidedly more desperate. After 15 years, Manto's owner Peter Dalton is finding the going so tough that he plans to sell up, claiming the area's profitability peaked five or six years ago. Peter Beswick, another of the village "elders", has seen revenues fall by 20 per cent inside two years at his Rembrandt hotel on Canal Street. "Friday nights here have become dreadful," he said. "It's tougher than ever." Part of the problem is that everyone wants a slice of the action. Mr Beswick started here 23 years ago with just eight gay venues for company, but he is now competing with 32, including 16 on Canal Street alone, and finds the law of diminishing returns extremely chilly.

"People just think the pink pound is a licence to print money," he said. "But obviously we don't breed like lemmings. There are only a certain number of gay people around."

Competition also comes from further afield as nearby cities such as Liverpool and Leeds now parade their gay scenes as symbols of municipal enlightenment. "These are all places from which we once attracted many visitors," said Mr Beswick, for whom the flow of corporate guests paying to stay in his 20 hotel bedrooms is becoming increasingly important.

Sexual tolerance cuts two ways for the Village's proprietors. Where nights out for gay people once involved clandestine visits to Canal Street to "walk up to a bar, dive inside and sit behind frosted glass windows" - as Mr Beswick describes it - gay couples now feel safe enough to desert the Village and mix with celebrities at Manchester's Deansgate Locks, on trendy Peter Street or in the Northern Quarter. These new haunts seem a far better proposition than six hours spent competing with the hen nights which can make Canal Street a chaotic and unsavoury place at times. The "hens" began arriving (with straight men in hot pursuit) after the 1999 Channel 4 drama Queer as Folk, which centred on Canal Street. "The programme brought all the wrong elements into the village," said Mr Beswick. "Coachloads [started] to pull up here on Friday nights. I've [now] stopped taking bookings for hen parties. You could guarantee the rooms would be wrecked."

Some establishmentshave tried to enforce gay-only and men-only door policies. But they find themselves accused of discrimination. Several people from outside the homosexual community have made complaints after being excluded from bars in the Village. The terms of all licences stipulate that customers of all sexual persuasions should be included.

In an attempt to reinvigorate the district, the Village Business Association (VBA) is urging Manchester City Council to provide licences to independent bar owners in the Village, rather than large operators whose purchasing power has wiped out some smaller operators in recent years. From April new bylaws will allow tables and chairs in designated outside areas. "We want them to help limit the numbers walking up and down with drinks and stop antisocial behaviour," said Phil Burke, the VBA chairman.

But the classified advertising in the North-west gay magazine Out says a lot about the new environment. Among the ads for local gay venues is one for the Tom Finney, the pub favoured by Manchester United fans.

Mancunians and the pink pound

* 1970s First openly gay bars established on Canal Street

* 1983 Peter Beswick takes over the Rembrandt hotel, turning it into the eighth gay establishment in the area

* 1987 Greater Manchester's Chief Constable, James Anderton, an evangelical Christian, accuses gays of "swirling around in a human cesspit of their own making".

* 1991 Manto bar opens. Its innovation: glass windows

* 1991 Manchester holds first three-day Mardi Gras festival

* 1996 Big business arrives, in the form of Scottish and Newcastle plc's Via Fossa

* 1999 Canal Street stars in Channel 4's Queer as Folk. Hen parties begin arriving

* 2003 The biggest event yet: the 10-day EuroPride

* 2003 Pink plaque scheme celebrates the city's gay past

* 2006 Manto's founder announces he is to leave