Recession ends but hospitality insolvencies rise

The hospitality and leisure (H&L) sector experienced a 12 per cent rise in insolvencies at the end of last year, as news today came that Britain is finally no longer in a recession.​

According to PricewaterhouseCoopers (PwC), the H&L sector was the only one in the UK to experience a rise in the number of business failures in Q4 2009, a period which saw the highest level of hotel insolvencies over the course of the recession.

David Chubb, partner at PwC, said the regional H&L market had been hit worse by the recession.

“Despite the spending cutbacks in both the corporate and leisure sectors, London remains a must-see destination for both UK and global travellers benefitting from the weak pound,” he said. “Individual hotels based in the provinces and not affiliated with a major brand have continued to suffer from poor occupancy and low rates. We expect this to continue into 2010.”

End of the recession​

Whilst news came today that Britain is now out of a recession, having seen a rise in Gross Domestic Product of 0.1 per cent over the last three months, experts have warned the H&L sector is not ‘out of the woods’ yet.

Richard Hathaway, head of Travel, Leisure and Tourism at KPMG, said although figures for leading hotel, restaurant and pub groups had improved recently, many smaller businesses are continuing to struggle.

“The figures may signal the end of UK recession but for the leisure sector things are far from cut and dried. There remains varying outlooks for businesses throughout the sector, and often the story differs between the larger and smaller operators. 

“Hopefully the news that we are out of recession in the UK will help boost consumer confidence and have a positive impact on the leisure sector. Those that are beginning to see green shoots need to act now, undertaking effective forecasting to support robust business planning, to ensure their business models allow for the agility needed to achieve growth in this ever changing world.”