Number of hospitality administrations fall by half

The number of hospitality and leisure (H&L) businesses going into administration has dropped by half, surprising industry experts Deloitte.​

Figures released by the business advisory firm show that the number of H&L businesses going under fell by 52 per cent from 93 in Q1 2009 to 45 in Q1 2010.

Lee Manning, reorganisation services partner at Deloitte, said the extent of the decline was unexpected.

“Traditionally, the first quarter of the year sees an increase in the number of companies falling into administration following the festive season,” he said. “However, this year we have not seen this and the trend suggests that we may well have turned a corner.”

Manning suggested that cost cutting and management measures put in place as a reaction to the recession had helped businesses to see positive results, but he expects the impending election to put further cost pressures on fragile businesses.

Trading difficulties 'not over yet'​

“The pain may have eased, but I am not confident that it is over,” he added.

“It will be interesting to see how this plays out after the election when new legislation may come into force. Those businesses that have already done everything they can to manage cash flow may not be able to tighten their belts any further and consumers will no doubt have to rein in discretionary spending. Businesses are not out of the woods yet and the outlook for the latter part of 2010 should be viewed with caution.”

The total number of companies that went into administration from October 2009 to March 2010 was 1,154, the fewest for a six month period for the last four years.