Hotel insolvency rate slows down

By Becky Paskin

- Last updated on GMT

Related tags: Bankruptcy

The rate of hotel insolvencies is beginning to slow down
The rate of hotel insolvencies is beginning to slow down
The rate of UK hotel businesses becoming insolvent has begun to slow down, while those in London return to an average rate

The quarterly UK hotel insolvency rate has dropped by four per cent, although experts warn that trading conditions will continue to remain tough.

Figures released by PricewaterhouseCoopers​ reveal that although the number of hotel insolvencies is up by 120 per cent on last June, the rate of hotel failures has started to slow down significantly in the second quarter of this year.

While the majority of failures in Q2 of 2009 were found to be independent businesses, PwC found a trend for struggling hotels to pursue alternative financial restructuring, such as debt-for-equity swaps that are less likely to result in further losses.

The figures also revealed that hotel insolvencies in London had returned to an average quarterly rate of six, a result Stephen Broome, director at PwC, said is due to reduced room rates and an increase in domestic travel.

“London hotel performance is much stronger than many other markets and has performed well considering the global reduction in demand for hotels,” he said. “By selectively reducing prices, hoteliers have attracted leisure-based customers in the absence of the corporate traveller.”

Broome also urged hoteliers not to heed advice conveyed earlier this month by advisory firm Deloitte​ for businesses to start increasing their room rates, claiming swine flu and the strengthening of the pound may upset the market.

Related topics: Trends & Reports

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