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Unexpected drop in hospitality administrations

1 commentBy Peter Ruddick , 04-May-2012
Last updated on 04-May-2012 at 14:20 GMT

Accountancy firm Baker Tilly has analysed the latest figures from insolvency regulators The Insolvency Service and revealed the number of hotel and licensed businesses appointing administrators dropped unexpectedly in the first quarter of the year.

In the first three months of the year the number of businesses calling in the administrators dropped by 32 per cent from the last quarter of 2011, according to the latest statistics from The Insolvency Service.

According to Baker Tilly a big drop in the number of restaurants and bars facing problems was behind the good news overall for the sector. However hotels also saw a drop in the number of formal administrations as occupancy and revenue per average room (RevPAR) continues to rise as the Jubilee and Olympic celebrations near. 

Flash in the pan

Peter Cooper, partner at Baker Tilly, said the big question was whether the surprise drop was a flash in the pan or the beginning of a trend for the hospitality industry.
"These figures are a welcome, albeit unexpected, shot in the arm for a sector that has shown a significant degree of volatility over the last few years. Previous concerns regarding the impact of a decline in consumer spending, combined with limited prospects for a full scale economic recovery, do not appear to have translated into increased levels of financial distress and formal insolvencies."

"Christmas trading seems to have held up, and with tourists pouring into the country there is a sense of cautious optimism for 2012 and beyond. That said, as the country lapses back into recession the big question is whether the sector is genuinely out of the woods, or simply riding on the crest of a Olympics and Diamond Jubilee wave," Cooper added.

Positive

In February similar analysis by Baker Tilly led the firm to suggest there should be 'no room for complacency' in the industry and predict that insolvencies would continue to rise in Q1 of 2012 after a number of significant hospitality businesses facing administration in 2011.

However a survey last month by the accountancy firm suggested almost half of hospitality operators felt positive about the coming year with less than 10 per cent having a negative outlook or fearing another recession.

Today's figures appear to contradict the latest Red Flag Alert statistics from Begbies Traynor released late last month which suggested pubs and bars remained among  the country's 'most distressed' UK businesses experiencing a 95 per cent rise in critical problems faced.

1 comment (Comments are now closed)

Flash in pan

I think if you take the last two quarters together you get a clearer picture. The last quarter of 2011 jumping 31% is negated by this quarter. Maybe more restaurants couldn't survive til Christmas last year, that would have ordinarly gone bust into the new year. Remember aswell the last quarter of 2010, would have been affected by the big freeze of December and January 2010, thereby maybe giving an unusually large amount into the new year of 2011.

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04 May 2012 | 17h07

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