07/09/2009 - Concern over hotel insolvency rates
Despite a rise in the number of Britons spending holidays in their own country, hotel groups are going under at a faster rate than ever, figures show.
According to accountancy firm Wilkins Kennedy, 53 hotel insolvencies were reported in April-June 2009, a rate of one every second day.
The growth in the number of 'staycationing' Britons has been unable to overcome the effects of crashing commercial property values, the group said.
Wilkins Kennedy director Anthony Cork added that part of the problem was because banks are reluctant to lend to companies whose underlying assets are based on property, such as hotels.
He said: "Commercial property values have crashed, bank shareholders including the UK taxpayer have had their fingers burnt and a modest rise in the number of UK holidaymakers staying at home can't make up the weakness in the asset value of hotels.
"Unfortunately the average UK hotel just isn't worth what it was a couple of years ago."
Figures showed that overall there were 6,588 company insolvencies during April-June 2009, an increase of 65% over the July-September 2007 period just before the credit crunch took hold.
Construction companies, with 563 insolvencies, were the worst hit, followed by the real estate sector where 510 firms went bust.
Copyright © Press Association 2009
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