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Hospitality and leisure sectors suffer increased insolvencies

The hospitality and leisure sectors have suffered considerably through insolvencies over the last year, research has shown.

Analysis from PwC shows a 30% increase in the number of insolvencies in these industries, compared with the same period in 2010.

Construction continues to be the worst affected sector with a total of 656 companies becoming insolvent, followed by manufacturing (394), retail (447), hospitality & leisure (375) and real estate (123).

London held most insolvencies, showing an 8% increase from the same quarter in 2012, although the East Midlands presented the area with the highest increase at 27%.

In the North East and Cumbria the numbers had grown by 8%, representing a total of 143 companies.

Sean Hamilton, director of business recovery in the North East commented: “Q4 would normally be seen as a good time for bars and restaurants because of the festive season so it is worrying that both these sectors saw a marked increase in the number of insolvencies.

“We would normally expect to see more casualties in the post-Christmas period and we will have to wait to see whether this does occur or whether the early Christmas gloom resulted in some businesses failing earlier than would normally be the case.

“The post Christmas blues are always a challenge for restaurants and bars but some businesses are still performing well and these are often those that have focused on ensuring that they understand what their customers want and deliver without fail.

“Customers have a lot of choice and one bad experience in a bar or restaurant can lose that customer forever.”

Mr Hamilton went on to say that companies who acted quickly, typically had more options at their disposal, and secured a positive outcome.

He added: “The total corporate insolvency numbers for all sectors demonstrate that the decline in the level of insolvencies witnessed in 2010 has continued into the fourth quarter of 2011.

“In total, 3,759 companies became insolvent in the fourth quarter of 2011 compared to 4,042 in the previous quarter – a 7% decrease.

“However, the level of insolvencies increased by 4% compared to the fourth quarter of 2010. “

This was posted in Bdaily's Members' News section by Tom Keighley .