Hospitality and leisure insolvencies jump 30% before Christmas 2011

Insolvencies in the hospitality and leisure industry have rocketed 30% in the last quarter of 2011 compared with the last quarter of 2010.

Analysis of Government insolvency statistics by PricewaterhouseCoopers (PwC) showed that there were 375 insolvencies in the hospitality and leisure sector in the fourth quarter of 2011 compared with 289 in the same quarter of 2010.

In 2010, the fourth quarter saw a drop in insolvencies from the third quarter but in 2011 there was a 12% increase.

David Chubb, PwC business recovery partner and hospitality and leisure specialist, said: "Q4 would normally be seen as a good time for bars and restaurants because of the festive season so it is worrying that both these sectors saw a marked increase in the number of insolvencies. We would normally expect to see more casualties in the post-Christmas period and we will have to wait to see whether this does occur or whether the early Christmas gloom resulted in some businesses failing earlier that would normally be the case.

"The post-Christmas blues are always a challenge for restaurants and bars but some businesses are still performing well and these are often those that have focussed on ensuring that they understand what their customers want and deliver without fail. Customers have a lot of choice and one bad experience in a bar or restaurant can lose that customer forever."

Total corporate insolvency numbers for all sectors were down 7% in the fourth quarter of of 2011 compared with the same period a year before.

PwC's analysis shows that London continues to have the highest number of insolvencies with 941, and compared with the same quarter in 2010, shows an 8% increase in volume. The East Midlands had the biggest increase in insolvencies compared with the same quarter in 2010, with 204 insolvencies in the fourth quarter of 2011 compared with 161 in the same quarter of 2010, a 27% increase

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By Neil Gerrard

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