On-trade administrations continue to rise

The number of hotel and licensed trade businesses falling into administration increased by 29.2% from Q3 to Q4 of 2011, according to accountancy firm Baker Tilly.

The continuation of the upward trend previously reported between Q2 to Q3 2011 means the sector has been one of the worst hit by the country’s economic woes, nursing an overall 19.3% annual increase in administrations during 2011.

Hotels are primarily responsible for the increase, with the number of administration appointments increasing from 51 to 80 year-on-year, an increase of 56.9%.

Commenting on the figures Peter Cooper, partner at Baker Tilly Restructuring and Recovery, said: “At the end of Q3 2011, we predicted an increase in the number of hospitality and leisure industry insolvencies for Q4, based on uncertainty around the prospects for a full scale economic recovery, a decline in consumer confidence, a fall in spending power and restrictions in the availability of working capital.

“As the year came to a close, there is no doubt these factor combined to create very tough conditions for an increasing number of distressed businesses in the sector.

“Our view remains unchanged: there is no room for complacency or underperformance in the current climate.

“We expect the rise in insolvencies to continue into Q1 2012 as a lag response to defaults on December quarter rent payments.”