Hospitality sector is North East’s most improved

The North East’s hospitality businesses are the region’s most improved in terms of financial security over the last year, according to new research by insolvency trade body R3.

Almost 77% of regional hotels, restaurants and bars have seen their risk of insolvency fall in the last 12 months according to the data compiled by R3 using BVD’s Fame Database of company information, which covers the North East’s ten biggest industry sectors.*

Professional, scientific and technical businesses made up the next best performing private industry sector, with 76% of companies improving their respective performances in the last year.

The region’s traditional powerhouses of manufacturing and construction featured around the midpoint of the list, with 73% and 72% of the firms in each one seeing their respective risk of insolvency fall in the last year.

Steve Ross, who is chair of R3 in the North East and a partner in the restructuring team at the Sunderland office of Baker Tilly Business Services Limited, said: “After so many years of bad news, these latest figures at least offer some encouragement that things are gradually improving, even if the pace of improvement is variable across different sectors and some industries are still clearly having a bumpier ride than others.

“The tourism and hospitality sector has become increasingly important to the North East over the last decade, so it’s very encouraging to see the year-on-year improvement in this area - a summer of excellent weather combined with the beginnings of a sustained economic recovery will certainly have given the region’s hospitality sector a boost.”

Professional, scientific and technical services also enjoyed the highest proportion of ‘fast’ improvers within the private sector, with over 9% of businesses seeing their chance of insolvency fall by over 20%.

R3 compiled the data using BVD’s Fame Database of company information. Companies in the Fame database are awarded a score based on their likelihood of insolvency in the next year. This score is based on factors such as turnover, pre-tax profit, working capital, cash and bank deposits and other factors. A high score indicates a low risk of insolvency in the next year, and vice versa.

The research took the top sectors (by employees) in the region and measured the number of businesses in each sector whose score had risen from last year (i.e. become more financially secure) and the number of businesses whose score had fallen (i.e. become less financially secure).

*Largest by number of employees