According to new research by accountancy firm Hacker Young, insolvencies in the British hotel industry have reached a five year high, up 60% on the previous year.
2019 saw 144 insolvencies in the sector, their report suggests, as opposed to 90 in the previous period.
Overall sluggishness in the UK economy may be one of the principal factors, along with a reduced demand for hosting corporate events. Traditionally a good source of revenue, corporate events offer hotels the chance to make money via catering, room hire, and venue bookings.
‘The hotel sector has faced strict competition from Airbnb in recent years,’ commented Company Debt director Mike Smith. ‘Airbnb has been consciously increasing market share within the premium segment, making it a viable alternative to hotels. In addition, Airbnb has brought with it a cultural shift whereby people now expect all of their homecomforts at a relatively low price when they go away. With their much larger infrastructure to maintain, hotels are understandably struggling to compete.’
The Fate of Hotels Points to Struggles Throughout the Entire Hospitality Sector
It’s not just hotels but the broader hospitality sector which faces difficulties as we head into 2020. Most city centres are suffering from the cultural shift in habits and spending patterns which have bought some many high profile retail insolvencies into the newspapers.
In addition, the hospitality sector faces staffing pressures due to Brexit, with one in six business owners saying they don’t have the workforce available to cope with the shortfall.
‘With the number of overseas tourists falling by 3% last year, ‘continues Mike Smith. ‘With margins squeezed via higher business rates and a weaker pound contributing to more expensive imports, we should expect this trend to continue for some time to come.’