The latest PwC analysis of corporate insolvency numbers shows that hospitality and leisure (H&L) was one of the worst off sectors in the twelve months to the end of September compared to the same period the year before.
In total, there were 1.464 insolvencies in the H&L sector in the past twelve months compared to 1,304 in the same period the year before. Despite this rise, H&L insolvencies in Q3 2012 were down by 15% compared to Q2, and were down by 11% compared to the same quarter last year. The number of insolvencies across most areas of H&L dropped between Q2 and Q3 apart from gambling and sport. The biggest drop between Q2 and Q3 was seen in hotels, which saw a 43% fall, followed by travel & tourism which saw a 40% drop and bars, a 23% decrease.
After reaching a high level at the end of 2011 and into the start of 2012, the level of H&L insolvencies has steadily fallen since Q1 this year, which has been driven by a reduction in insolvencies for pubs and restaurants. However, restaurants were still the worst hit of all H&L sectors in Q3 2012, with 156 insolvencies across the UK. London saw the highest number of restaurant insolvencies in Q3 2012 with 59. London alone has seen 451 restaurant insolvencies since Q4 2010, out of a national total of 1,326.
|
BRS Industry |
2010 Q4 |
2011 Q1 |
2011 Q2 |
2011 Q3 |
2011 Q4 |
2012 Q1 |
2012 Q2 |
2012 Q3 |
Grand Total |
|
H&L – Bars |
73 |
83 |
94 |
71 |
96 |
100 |
82 |
63 |
662 |
|
H&L – Campsites |
2 |
1 |
2 |
1 |
1 |
2 |
1 |
|
10 |
|
H&L – Gambling |
3 |
1 |
2 |
2 |
1 |
5 |
1 |
4 |
19 |
|
H&L – Hotels |
32 |
54 |
37 |
45 |
40 |
46 |
58 |
33 |
345 |
|
H&L – Other |
21 |
17 |
9 |
21 |
15 |
15 |
16 |
13 |
127 |
|
H&L – Restaurants |
139 |
141 |
160 |
156 |
191 |
219 |
164 |
156 |
1,326 |
|
H&L – Sport |
20 |
24 |
25 |
30 |
21 |
28 |
16 |
21 |
185 |
|
H&L – Travel & Tourism |
11 |
9 |
8 |
10 |
19 |
13 |
15 |
9 |
94 |
|
Total |
301 |
330 |
337 |
336 |
384 |
428 |
353 |
299 |
2,768 |
David Chubb, PwC business recovery partner and hospitality and leisure specialist, commented: “Pubs and restaurants have had a good quarter in the fight against the recession. They continue to combat drops in discretionary spend by enticing consumers with promotions like set menu vouchers, happy hours, and multi buy deals. However, there are signs that consumers are now expecting this and are farming the offers without spending on additional courses or drinks which the promotion was priced to entice. Consequently, operators are now having to consider the economics of the special offer strategy.
“We are seeing that parts of the pub sector are coming out of recession and there are some good news stories, but behind the figures it is still very clear that across the sector there are both winners and losers. Under-invested pubs and over capacity will continue to be issues and consequently further closures are inevitable, but this has a positive impact for the survivors.
“Most of the businesses will be looking for an uplift in performance over the Christmas period and therefore I would expect a further drop in insolvencies in the next quarter. Only time will tell if H&L insolvencies continue to decline beyond the Christmas period, but certainly recessionary pressures on leisure spend will continue over the next 12 months. Limited spending is likely to focus around leisure activities with an element of treat and experience but despite the consumer squeeze, leisure remains a key component of consumer spending.”
Across all sectors the level of insolvency has continued to decline every quarter this year. There were 3,296 incidences of insolvency across the UK in Q3 this year compared to 4,045 in Q3 2011. This means that the number of companies falling into administration during Q3 this year fell by 19% compared to the previous quarter and there was a drop of 18% compared to Q3 2011.
Which sectors are struggling the most?
The worst affected sectors continue to include construction (631 insolvencies) manufacturing (392), retail (346), hospitality & leisure (299) and real estate (139).
Across the UK
PwC’s analysis shows that all regions showed a decline in the number of insolvencies versus the same quarter last year. Most regions also showed a decline compared to the previous quarter of 2012, apart from the West which showed a 7% rise and Wales, an 8% increase.
London continues to have the highest number of insolvencies with 851 in Q3, and the region showed a 15% decrease in volume compared to the same quarter last year. Compared to the previous quarter in 2012, London insolvencies in Q3 were down by 6%.
The South West saw a 33% fall in insolvencies in Q3 compared to the same quarter last year, which was the biggest year on year improvement of all the regions. The North East & Cumbria was the region that showed the biggest improvement compared to the previous quarter of this year, with a 58% fall in insolvencies.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
