ONE in five hotels in the North East are at risk of failing, but the region’s industry is still one of the best-performing in the United Kingdom.
After the wettest June on record continued to drag down an already recession-hit tourist industry, a report from insolvency trade body R3 will do little to lift hoteliers’ spirits.
It says 3% of hotels in the region are at high risk of failure over the next 12 months and 17.5% face a significant risk of failure.
But the industry in the North East is still faring better than most other regions. Only hotels in Yorkshire (20%), Scotland (18%) and London (17%) have a smaller percentage of venues falling into these negative bands
Wales,(25%), the East Midlands (26%) and the South West (24%) have some of the largest proportions of hotels at risk.
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 regional hotels... experiencing business difficulties in the last few months.”
He added that while the region has many reasons to be positive about its hotel sector, “discretionary spending of this type is still under great pressure”.
But most of the bigger and better hotels, including Seaham Hall and the Vermont which have both found new owners, are surviving and it is the smaller sites which are in danger.
Peter Sloyan, who heads the North East Hoteliers Association, said: “One reason this region is doing well despite the problems in the tourist industry is that the hotel market is relatively undeveloped compared with Scotland or the Lake District.
“And we are still seeing new hotels opening, although that is possibly because the feasibility studies were done before the recession.
“But while the well-known venues like Matfen or Close House are doing well, the competition is tight and those who haven’t adapted to the new market in terms of competitive pricing or an outstanding offering are suffering, especially smaller venues out of the towns.”
