Official statistics published today by The Insolvency Service have revealed that the overall number of businesses appointing Administrators in the hotel and licensed sector fell significantly, by 35% year-on-year in 2012. This represents the lowest levels seen in the past five years.
Recovery in the sector
Commenting on the figures Tony Wright, Partner at Baker Tilly Restructuring and Recovery LLP, said:
“Whilst we experienced the usual seasonal increase in Administrations in Q4 2012 compared to Q3 2012, the decrease in Administration numbers over the course of the full year indicates a recovery in the sector and resilience to the wider economic woes, with appointments at five-year lows.
“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, in turn having eased the pressure on consumer spending in the period. 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 most improved
“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?
Caution remains
“Although the sector appears to have rebounded, there is still caution in the air with worries surrounding the limited prospects for a full scale economic recovery and the Eurozone woes leaving many operators concerned for the next twelve months, especially given the number of well-known high-street names entering Administration over the winter period.”