Member Article

1 in 5 North East hotels risk failure

One in five hotels in the North East are at risk of failure, and may have difficulties in continuing to trade unless significant remedial action is taken.

According to R3, the insolvency trade body, 2.5% of all North East hotels are at high risk of failing, while an additional 17.5% are facing a significant risk. These hotels are four times more likely to fail than hotels in the ‘normal’ band.

Steve Ross, chair of R3 in the north east and a director in the Corporate Recovery department of the Sunderland office of accountancy firm RSM Tenon, said: “The hotel industry has become increasingly important to the north east over recent years, both from a tourism point of view and as part of the work done to promote the region as a conferencing destination.

“We’ve also seen a number of high profile hotels across the region, such as Seaham Hall and the Vermont Hotel in Newcastle, experiencing business difficulties recently, whether through their own individual circumstances or the performance of the group that owns them, and financial problems that occur at hotels of any size can obviously have serious consequences for the jobs of the people that work there.

Despite this however, North East hotels are still faring better than in other parts of the UK. Only Scotland and London have a smaller percentage of venues falling into these negative bands, while statistics also showed that venues in Wales, East England the the South West have the biggest number of hotels at risk.

Steve continued: “Our region has a great many reasons to be positive about its hotel sector, from both the business and the leisure visit sides, and there are a lot of venues that are doing extremely well, but in an economic climate where discretionary spending of this type is still under great pressure, operators need to be fully aware of the details of their venues’ commercial performance.

“As with any sector, we would urge those concerned about the long term viability of their business to seek the advice of a professional sooner rather than later, so they can find ways to mitigate the threats they might be facing.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .