According to business consultancy Begbies Traynor’s Red Flag Alert report, the number of hotels and accommodation providers claiming to suffer from critical financial issues has risen from 45 in Q1 of 2011, to 66 in Q2, while year on year the number has risen from 54 in Q2 2010 – a rise of 22 per cent.
Meanwhile the number of travel and tourism businesses suffering from critical financial problems has also risen by 31 per cent in the last quarter.
Julie Palmer, Partner at Begbies Traynor, said the substantial increase has come despite a series of major events such as the Royal Wedding and long Easter break, which would usually have boosted trade.
“A significant proportion of the population are being squeezed by inflationary pressures and concerns over the security of their employment and are therefore being extremely cautious with their spending – which is beginning to have a real impact on travel and tourism related businesses, particularly the UK hotel market which has seen a 47% increase in critical problems since the last quarter.”
The report also found that across all sectors in the UK more businesses have made the transition from ‘significant’ to critical’ problems, with a rise of 12 per cent suffering from the latter.