Hospitality suffers biggest increase in insolvencies, says PwC

The latest PricewaterhouseCoopers (PwC) analysis into corporate insolvency numbers shows that the hospitality and leisure industry is suffering more than most.

The sector, the tax and financial advisory group claims, is significantly worse off compared to this time last year with a 30 per cent increase in insolvencies in the last quarter of 2011 compared to the last quarter of 2010. 

There were 375 insolvencies in the hospitality and leisure sector in the fourth quarter of 2011 (289 in Q4 2010).

In 2010, Q4 had seen a drop in insolvencies from Q3 but in 2011, there was a worrying 12 per cent increase.

In the hotels sub-sector of hospitality, PwC tracked 38 insolvencies in Q4 2011.
David Chubb, PwC Business Recovery Partner and Hospitality and Leisure Specialist, commented:
“Q4 would normally be seen as a good time for the sector because of the festive season so it is worrying that we 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.”
Chubb added that some businesses were still performing well, however. “These are often those that have focused on ensuring that they understand what their customers want and deliver without fail. Customers have a lot of choice and one bad experience can lose that customer forever,” he said.
The total corporate insolvency numbers for all sectors demonstrate that the decline in the level of insolvencies witnessed in 2010 has continued into the fourth quarter of 2011. In total, 3,759 companies became insolvent in Q4 2011 compared to 4,042 in the previous quarter – a seven per cent decrease.
Hospitality and leisure was third worst performer for insolvencies, behind only construction and manufacturing.
PwC’s analysis showed London continues to have the highest number of insolvencies with an eight per cent increase in volume.
The East Midlands had the biggest increase, percentage wise in the last quarter of 2011, while most improvement was recorded in the South East where the number of insolvencies dropped by 21 per cent Q4 2011 over Q3 2011.
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Paul Colston


Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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