UK hotel insolvencies hit a five-year high in 2019, rising 60 percent to 144 in the year to September 30, 2019, from 90 the year before.
That’s according to accountancy firm UHY Hacker Young, which found after analysing Insolvency Service figures that the rise in insolvencies is driven in part by a slowing UK economy. It said businesses have cut back on conferences and away days.
Corporate events are a vital source of revenue for hotels as they provide income from venue hire, room bookings and food and drink.
Competition in the sector has sharply increased following a surge in alternatives, such as Airbnb. Having originally been seen as an alternative to the budget hotel market, Airbnb is also trying to increase sales in the premium segment.
The growth of alternatives has also helped to reset consumer’s expectations, who now expect home comforts and a low price, Hacker Young said.
Direct competition has also driven down room prices, it was found, after a rise in the number rooms available in the UK. Last year 15,500 rooms were added to the hotel market with a further 19,300 forecast for 2020.
Peter Kubik, turnaround and recovery partner at UHY Hacker Young, said: “The hospitality sector is facing a period of considerable upheaval. Those hotels that are unable to fund change face being left behind.”