Hospitality administrations climb by 19% in 2011

Hospitality businesses recorded a 19.3% increase in administrations in 2011, confirming that it was one of the industries hardest hit by the economic downturn.

Hotels are primarily responsible for the increase, with the number of administration appointments increasing from 51 to 80, year-on-year (an increase of 56.9%).

Peter Cooper, partner at insolvency experts Baker Tilly Restructuring and Recovery, said that the company had predicted an increase in the number of hospitality insolvencies for the final quarter of 2011, based on uncertainty around the prospects for a full scale economic recovery, a decline in consumer confidence, a fall in spending power and restrictions in the availability of working capital.

"As the year came to a close, there is no doubt these factor combined to create very tough conditions for an increasing number of distressed businesses in the sector," he said. "Our view remains unchanged: there is no room for complacency or underperformance in the current climate. We expect the rise in insolvencies to continue into Q1 2012 as a lag response to defaults on December quarter rent payments."

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By Janet Harmer

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