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Hospitality insolvencies set to rise after summer lull

03 July 2009 by
Hospitality insolvencies set to rise after summer lull

The number of hospitality companies being made insolvent is set to rise again after a summer "lull", consultancy KPMG predicted today.

There has been an average of 350 administrations a month since the beginning of the year, but figures for May are much lower at 178, which KPMG described as "unusual" given the economic climate.

But the consultancy warned that this was not a sign of recovery, but a "temporary reprieve" that signalled a second wave of insolvencies, with September a "critical period" for the hospitality industry in particular.

Richard Fleming, UK head of restructuring at KPMG, said: "We are not convinced that this indicates an upturn in sentiment; more a temporary reprieve in advance of a second wave of insolvencies."

"September is likely to be the crunch month for many businesses in tourism and leisure with the busiest period of the year over. With demand expected to be at new lows, even larger industry players could be affected."

Richard Hathaway, head of travel, leisure and tourism at KPMG agreed that the next quarter will be "critical" for many UK hospitality businesses

"Their hopes for the summer months will rest on people choosing to holiday in the UK, or stay at home and spend more of their leisure pound on meals out and local entertainment," he said.

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By Gemma Sharkey

E-mail your comments to Gemma Sharkey here.

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