Hotel insolvencies to carry on rising in 2010

As many as 40 hotel companies could go into administration in the first quarter of 2010 alone, an insolvency expert has warned.

The prediction comes as official insolvency figures showed a 161% increase in the number of hotel firms falling into administration in 2009, compared with 2008.

John Alexander, partner at Carter Backer Winter, told Caterer: “I have forecast a huge increase in hotel insolvencies in the first quarter of this year alone – we could have as many as 40, compared with 31 in the first quarter of last year.”

Alexander added that it was provincial hotels that were driving the trend, as they struggled in the wake of cancelled corporate bookings prompted by the banking crisis, as well as the freezing winter weather.

“You always get a post-Christmas increase in insolvencies because people hold on for the Christmas trade. This Christmas we have had all the cold weather and a lot of country house hotels and out-of-town hotels lost almost all their trade because the snow meant people couldn’t travel out to the country,” he said.

The industry saw several high-profile hotel firms collapse into administration last year, including The Real Hotel Group and the Charlton House Hotel and Spa, the 26-bedroom, four-AA-red-star country house property in Shepton Mallet, Somerset. Meanwhile the start of this year has already seen the three-AA-red-star, three-AA-rosette Gravetye Manor near East Grinstead, West Sussex, call in the administrators.

The hospitality sector as a whole saw a 25% year-on-year rise in administrations, with 240 firms calling in the accountants. Meanwhile administrations were up 22% between the fourth quarter of 2009 compared with the quarter before.

But there was a much less dramatic increase in the restaurants sector, with a year-on-year rise in administrations of just 1.9%. And insolvencies in the fourth quarter of 2009 were actually down 11.5% to just 26 compared with the same period in 2008.

Alexander predicted that 2010 would remain a tough year for the entire hospitality sector, as increasing costs, higher tax rates and a lack of finance kept consumer confidence low.

“UK leisure has had it really tough in the past year and I think the recovery will pass them by for some time to come. There was an expectation that hotels would benefit from people taking ‘staycations’ but that didn’t really happen. It will take until 2011 until things start picking up,” he said.

Hotels hardest hit by insolvencies in 2009 >>

Administrators seek new owners for debt-ridden Gravetye Manor >> 

By Neil Gerrard

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