North East Connected

Insolvency Risk Rise in North East Hotel Sector on Back of Disappointing Summer Weather

Screen Shot 2015-08-25 at 10.16.00The disappointing weather that the British summer has so far delivered to the North East may have contributed to a rise in the insolvency risk facing hotel businesses across the region.
According to the latest sectoral analysis by insolvency trade body R3, the proportion of North East hotel businesses with a higher than normal risk of insolvency has risen by over four per cent since the start of July, to now stand at 21 per cent.
But in more positive news, the region’s pub sector has seen a fall of over five per cent in its insolvency risk over the same period, while the North East transport/haulage sector has recorded the lowest such risk of any of the 12 UK regions for the sixth consecutive month.
R3 uses research compiled every month from Bureau van Dijk’s ‘Fame’ database of company information to track the number of businesses in  key sectors that have a heightened risk of entering insolvency in the next year.
In the latest monthly figures, the region’s manufacturing, technology & IT, restaurant and pub sectors all maintained positions in the top half of the UK-wide tables for their respective industries, while the regional construction sector has registered a slight improvement in its fortunes.
Allan Kelly, chair of R3 in the North East and a restructuring partner with Baker Tilly North East, believes there are plenty of reasons to be optimistic about the future of the region’s hospitality sector.
He says: “While the latest monthly figures for the hotel sector are disappointing and not what anyone would want to see during the summer, one of the features of this year has been the number of major investments that are being made in hotels, pubs, restaurants and other leisure venues around the North East.
“There’s a real drive taking place to enhance what the region has to offer to visitors, and this would only be happening if owners and operators had confidence that they’d be able to recoup on their investment by attracting customers from both inside and outside the region.
“The second half of the year offers plenty of opportunity for the hotel sector to make up the ground it has lost recently, particularly with the new football season having kicked off and the Great North Run on the horizon.
“The general story remains still one of increasing business stability, which is something most businesses would happily settle for after the recent years of upheaval, and it’s a trend we’d hope to see continue through the rest of the year.
“If financial concerns do become apparent, the best way for company owners and management teams to address them is to proactively seek advice from a qualified source such as an R3 member as soon as they appear, rather than ignoring them in the hope that they’ll disappear.”
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