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Record number of insolvencies in leisure sector
The number of insolvent hospitality and leisure companies has increased by 95 per cent in the past two years with a further 300 companies expected to go out of business, by the end of the year.
A report by PricewaterhouseCoopers, based on figures for the third quarter of 2008, show that pubs and bars, restaurants and hotels are the hardest hit by the economic slowdown and trade is expected to get worse from Q4 2008.
As well as hotels experiencing a slowdown in demand during the second half of this year, 64 pub and bars have gone under this quarter – an increase of 156 per cent on two years ago – and in the last year insolvencies have increased by 113 per cent. Restaurant insolvencies have also increased by 95 per cent from the end of 2006 to October 2008.
Stephen Broom, hospitality and leisure director at PricewaterhouseCoopers, said: “As the downturn tightens its grip, it is easy to believe what we have seen so far is just the tip of the iceberg for hotels. Although hotel insolvencies have increased by over 150 per cent from the end of 2006 to October 2008, there will be further failures in 2009 when the full impacts of reduced demand will be felt.
“Most hotel businesses are entering this recession far better equipped to cope than was the case in the early 90’s recession. For example in addition to the availability of highly sophisticated rooms yield software, hotels have the benefit of access to multi channel distribution systems that allow the operator much greater flexibility in terms of pricing and most importantly speed of reaction to changing patterns of demand,”