Clue: British left occupies gutted hotel: major damage to London (3,5)
Answer: THE BLITZ
Explanation: Definition: major damage to London
An envelope ('occupies') of B ('British') plis L ('left') in THE [r]ITZ ('hotel') minus its middle letter ('gutted' – which more often is used to indicate the removal of all but the first and last letters , so that for example you might expect 'gutted hotel' to give you HL)