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Nearly 70% UK hotel operators are financially shaky, warns analyst

01 July 2009 by
Nearly 70% UK hotel operators are financially shaky, warns analyst

More than two thirds of the UK's hotel operators are in financial danger, analyst firm Plimsoll Publishing has warned.

Plimsoll rated each of the UK's largest 1,000 hotels companies into one of five ratings based on their overall financial performance: strong, good, mediocre, caution and danger.

The research rated 677 companies as being in danger with their survival in question; 32 as in a weakened financial position, 43 as needing financial improvement, 43 as needing improvement, and 37 as holding a respectable position.

But it also rated 211 companies as delivering a strong performance, reflecting a polarisation between failing and strong hotel groups in the industry.

David Pattison, senior analyst at Plimsoll, said it was no real surprise to see the high number of companies on the danger list, given the economic crisis.

"Obviously there are real concerns over the 709 firms rated as caution and danger; their futures look extremely uncertain," he added.

"Their management are now operating under severe financial pressure where even normal trading is proving hazardous. Many of these firms seem likely to be sold off; they are at an extremely high risk of failure unless they turn their performance around fast."

The companies that were strong performers have seen an average of 3.4% sales growth; profit margins sitting at an average of 13.9% and have all but been removed their debt.

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By Gemma Sharkey

E-mail your comments to Gemma Sharkey here.

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