Hospitality sector ‘will see rising insolvency risk’

Posted 11/02/2010

Businesses in the hotel and hospitality sector are to come under increased threat of insolvency in the coming weeks and months.

This is the view of John Alexander, partner at accountancy firm Carter Backer Winter, who told Caterer magazine that a combination of bad weather and poor economic conditions will lead to a rise in business failures among hotel chains.

He stated that the recent cold snap is likely to have undermined the expected increase in business many hotels were counting on over Christmas, while many consumers are continuing to stay away due to a lack of funds.

Mr Alexander stated that this could lead to a “huge increase” in the number of hotel insolvencies in the first quarter of the year, saying: ” We could have as many as 40, compared with 31 in the first quarter of last year.”

The expert added that he does not expect to see a recovery in the sector until at least 2011.

This comes after insolvency trade body R3 warned that the risk of business failures will increase this year due to government support schemes coming to an end.