Hotel workers predict five hotel chain casualties in 2009

Forty per cent of hotel executives have predicted that more than five hotel chains will go into administration this year.

The survey of 261 European hotel executives by law firm DLA Piper reveals a particularly grim outlook for the industry over the next year with 79 per cent overall expecting to see an unspecified number of bankruptcies in the sector.

Casualties in the hotel sector so far include Folio hotels, which went into administration at the end of 2008 and Real Hotels, which called in administrators in January. Last week, the Yang Sing Oriental Hotel in Manchester closed after just eight months of trading.

Those surveyed blamed the inability to raise capital in the current market (43 per cent) and the struggling European economy (33 per cent) for their pessimism.

Karen Friebe, global co-chair of DLA Piper`s Hospitality and Leisure practice, said: "Given the current economic climate it comes as no surprise that the majority of European hotel executives are decidedly bearish about the health of industry.

"The survey shows that the sector is alive to the changes in economic conditions. There will always be winners and losers. The winners are taking advantage by asking us to help with renegotiating contracts, even leases and recession proofing their businesses. They are reviewing their corporate structures to make them leaner and fitter. The losers are doing nothing.”

In a more positive light, those interviewed for the survey, launched at the International Hotel Investment Forum in Berlin earlier this week, found that 80 per cent saw some good buying †opportunities, with the economy/budget hotel sector representing the most attractive investment opportunity.

The majority of respondents – 71 percent – also regard investment in sustainable hotel development as a long-term trend.