Hospitality insolvencies continue downward trend

Insolvencies amongst hospitality businesses are falling, according to the latest figures from global information services company Experian.

A total of 113 companies in the leisure and hotels sector became insolvent last month, a fall of 22% compared to October 2011. The sector showed a big improvement compared with other sectors, with a 8.7% fall in business insolvencies across all industries.

The figures highlight an increasingly stable picture amongst businesses, with the data from the BusinessIQ Insolvency Index showing that 0.08% of 1,685 companies failed in October 2012, compared to 0.10% in October 2011. Company closures within the leisure and hotels businesses amounted to 0.12% of the sector in October 2012, compared to 0.16% during the same month in 2011.

The greatest improvement in the average rate of insolvencies was seen by firms with 101 to 500 employees - their insolvency rate fell from 0.21% in October 2011 to 0.15%. This was followed closely by firms with 26 to 50 employees whose insolvency rate fell to 0.17%, from 0.22% in October 2011.
The only year-on-year increases in the rate of insolvencies came from larger firms with over 501 employees, such as Barracuda Pubs, which saw an increase from 0.13% in October 2011 to 0.20%. Small firms with 6 to10 employees also saw a slight increase in insolvencies from 0.16% to 0.17%.
Max Firth, managing director, Experian Business Information Services, UK & Ireland, said: "Following the peak in March this year at 0.11 per cent, the insolvency rate fell to 0.08 per cent and has remained fairly steady each month since. It shows that insolvencies are indeed stabilising, but the increase during October in large business failures highlights the need for ongoing monitoring of all clients and suppliers, regardless of size.

"It's good to see that some of the bigger improvements were among the mid-sized firms that typically tend to suffer the most due to their size. As firms start to show signs of stability, and in some pockets of the UK, growth, they need to remain prudent in order to prosper."

Geographically, the West Midland, down to 0.07% from 0.12% in 2011, and Scotland, which experienced a fall from 0.08% to 0.04%, year-on-year, showed the biggest improvements in insolvency rates. Conversely, the largest increase in insolvency numbers were seen in Yorkshire, up from 0.09% to 0.014%, over the past year, and Wales, which increased an increase from 0.08% to 0.12% of business failures.

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