South West hotels are region’s strongest sector

News
13/09/2017


The South West’s hotel sector is the most stable of all 10 key sectors in the region, according to the latest research by insolvency and restructuring trade body R3.


The South West’s hotel sector is the most stable of all 10 key sectors in the region, with only 23.4% of firms at higher than normal risk of becoming insolvent in the next year, according to the latest research by insolvency and restructuring trade body R3.


This is closely followed by the agriculture sector (23.5%) and the South West’s manufacturing industry where 23.9% of firms have a heightened risk of insolvency.

August’s figures also show transport and haulage to be the least stable sector of those monitored by R3 in the region, with 33.8% of firms at higher than normal risk of entering into an insolvency procedure.


Alan Bennett, R3’s South West Chair and partner at Ashfords LLP, comments:

“Given the importance of tourism to the South West, it is encouraging to see this sector performing well relative to the rest of the local economy.

“The fall in the value of the pound over the last year is likely to have contributed towards the strong performance and will have helped balance out some headwinds – to a degree, anyway.

“A ‘cheaper’ pound will have boosted the UK’s ‘staycation’ market and made it more attractive for overseas tourists to come to the UK.”


However, despite this positive outlook in comparison to the rest of the region, insolvency risk for South West hotels has steadily increased over the last five months.

March saw just 19% of firms in the sector at a heightened risk of insolvency.


And August’s figure should also be understood in relation to the wider UK picture.

The South West’s hotel sector sits higher than the UK average of 20.6%, and has the highest proportion of firms at risk.


The government’s 2016 regional insolvency statistics, released last month, add further detail to the South West’s insolvency landscape.

The statistics show personal insolvencies in 2016 to be typically highest on the coast, due to a combination of high levels of unemployment and lower wages.


Alan Bennett adds:

“Although the South West traditionally receives the largest percentage of domestic tourism in the UK, this reliance on tourism could be seen as a double-edged sword. As the statistics show, despite being a significant draw for tourists to the region, seaside-resort towns are often areas high in rates of personal insolvency.

“The inconsistent, seasonal nature of the tourist trade will leave many smaller firms particularly vulnerable to the impact of any unexpected financial costs, which in turn will be felt by those employed within the industry.”


Alan adds:

“It is worth taking the sector’s success in the region with a side of caution, in order to avoid any complacency going ahead. If any firms or individuals are starting to experience the early signs of financial difficulty, it is essential they seek advice from a licensed insolvency and restructuring professional as soon as possible, in order to ensure the greatest chance of a successful rescue”.

Latest News