UK hotel insolvencies increase during waning economy

by Tiffany Millar on May 3, 2010

Despite reports that ‘staycations’ have overtaken travels abroad, UK hotel insolvencies have risen drastically during the recession. According to accountancy firm Wilkins Kennedy, there was a 61 per cent increase in hotel firm failures from 2008.

Although room demand saw a boost as more and more Brits opted to remain in country for holidays, overall business travel and issues with bank loans during the poor economy had an ill affect on companies. The situation was aggravated further by the volcanic eruption in Iceland.

Folio, McKeever, and the Cavendish were just a few of the large chains that called it quits during last year’s economic downturn. The recession last year has been called Britain’s worst since World War II. According to figures from the Office of National Statistics, however, visits from foreigners into Britain were only down by six per cent in 2009.

Yet despite a weakened pound and increased numbers of Britons holidaying at home, the hotel sector remained week. Anthony Cork, director at Wilkins Kennedy said that the conditions of the travel industry did not translate into increases in spending at hotels, especially since customers cut back on lengths of stay, as well a extras like room service.

Across the board, corporate insolvencies fell by 11 per cent for 2009, but last year, according to the survey, 122 hotel chains fell under. This was an increase of 46 companies from the year previous. Mr Cork attributes this to other corporations tightening their budgets, leading to a reduction in business travel across the board.

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