Scottish hotels suffer growing rate of failure

Scotland's hotel and catering sector had its worst year for insolvencies in a decade last year, according to the latest figures from the Department of Trade & Industry.

The statistics for fourth-quarter insolvencies in 2002 show a 143.5% increase over the previous year in the number of corporate failures among Scotland's hoteliers. The numbers rose from 23 in 2001 to 56 in 2002.

Figures for Scottish business as a whole were bleak, revealing six successive rises in corporate failure: from 441 in 1996 to 788 for 2002 - a rise of 78.7% overall.

Although the fourth-quarter figures for England and Wales are yet to be released, the first three quarters indicate that the failure rate in Scotland is much higher. The first three quarters of 2002 saw 530 hospitality business insolvencies in England and Wales, an increase of 33% compared with the same period in 2001.

Matt Henderson, the Scottish chair of R3, the Association of Business Recovery Professionals, commented: "It is likely that there are many more hoteliers and restaurateurs who are struggling but not going bust. These numbers are likely to be the tip of the iceberg, and I cannot foresee a great improvement in the year to come.

"It is also particularly concerning that these figures have happened during a fairly benign economic environment, with the lowest interest rates in a generation and a consumer spending boom which appears only now to be easing. It is also concerning that there is a long-term trend of ever-increasing insolvency numbers which is not mirrored in the rest of the UK, implying that this is solely a Scottish problem."