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Drop in administrations amongst hotels and licensed businesses indicate glimpse of economic recovery

01 February 2013 by
Drop in administrations amongst hotels and licensed businesses indicate glimpse of economic recovery

Tony Wright, partner at Baker Tilly Restructuring and Recovery, said that despite the expected seasonal increase in administrations in the final quarter of 2012 compared with the third quarter, the decrease in administration overall across the year indicates a recovery in the sector and resilience to the wider economic woes.

"The figures show that last year the leisure sector as a whole responded well to the continued low interest rates and the fall in inflation, which eased the pressure on consumer spending in the period," he explained. "With unemployment rates falling in the quarter to November 2012, and particularly poor weather last year, people have returned to the comfort of bars and restaurants amid the tough climate.

"Hotels and restaurants experienced the most substantial falls in the sector - levels of appointments of administrators down 36% and 41% in the past 12 months respectively - with the influx of tourists to the country for the Queen's Diamond Jubilee and the London Olympics last year undoubtedly providing additional income for the sector. The question for the industry going forwards is will this recovery be sustainable in the absence of these exceptional events in 2013?"

Wright warned that although the sector appears to have rebounded, there are still worries about the prospects of a full scale economic recovery, compounded by the Eurozone woes. "This has left many operators concerned for the next 12 months, especially given the number of well-known high-street names entering administration over the winter."

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By Janet Harmer

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