The hospitality and leisure industry has experienced an insolvency rate of 95 per cent in the last two years, a figure that is predicted to soar even higher in 2009.
According to figures from the Business Recovery team at PricewaterhouseCoopers LLP, the number of pubs, restaurants and hotels going out of business has almost doubled since 2006, with 300 companies diminishing in the third quarter of 2008.
The rate of insolvencies of pubs has unsurprisingly been blamed on a culmination of poor weather, the smoking ban, the failure to qualify for Euro 2008 and a rise in home consumption.
Stephen Broom, H&L director, PricewaterhouseCoopers LLP, said: “There are no surprises that in the last year pub insolvencies have increased by 113%. The majority of pubs suffering distress are wet-led community pubs losing out to supermarkets. Some have also found the competition from well known pub chains has had a detrimental effect as brand and familiarity become more important to consumers when personal expenditure is under pressure.”
PwC attribute an increase in restaurant and hotel insolvencies to the economic slowdown, as consumers limit their discretionary spending and businesses choose budget options for both travel and entertainment.
“There is no doubt looking at these statistics that we are now amidst a consumer slowdown, Broome continued. “As the situation is likely to get worse in 2009, experience from previous recessions tells us that consumers will trade down seeking value for money options whilst also seeking a memorable experience. Many more expensive high end restaurants will continue to struggle as they will see fewer corporate and leisure consumers.”
The figures follow the administration of Tom Aiken’s two Chelsea restaurants last month, which have been bought out by holding company TA Holdco.