UK: Accountancy and business advisor Azets has warned that 10 per cent of hotels in London and the south of England could shut permanently as a result of debt, losses and staffing problems.
Azets is an international accounting, tax, audit, advisory and business services group with 160 offices across the UK and Europe.
Citing industry reports, the firm is warning that 10 per cent of hotels in London could be forced to close by 2023.
Matthew Richards, partner, restructuring in Azet’s London office, said: “UKHospitality recently reported that the sector has £2.5bn in rent arrears alone due to the pandemic, further compounding the millions of pounds borrowed through the various Covid loan schemes made available last year. In addition, the latest survey from Market Recovery Monitor has disclosed that nearly 10 per cent of UK restaurants have closed since the pandemic. The hotel sector is probably going to be just as severely affected during the next 18 months.
“Many hotel businesses are seasonal yet have already been unable to capitalise on the normal Spring upturn in bookings. The collapse in business travel and the prevalence of working from home together with the cancellation of major events, weddings, parties, conferences and tourism has led to reduced occupancy and a severe haemorrhaging of income. Furthermore, hotels are also usually heavily geared with sizeable loans whilst still having to meet routine costs such as staffing, insurance, heating and marketing.”
He continued: “While many people are planning to staycation due to the difficulties of overseas travel during the pandemic rather than go abroad, unfortunately, the sector is now facing an unprecedented set of problems that is almost certainly set to cause long term strategic damage to the hotel and hospitality sector in the south and south east of England. It would be entirely reasonable if several hotel operators, owners and entrepreneurs decide that the problems are insurmountable and close their businesses. If 10 per cent of hotels close, it will have a serious impact on local urban and rural economies given the importance of the sector in terms of employment, investment and the cohesive role hotels play in local communities.
“The hotel sector in the south of England is tackling an unprecedented number of problems, and there will inevitably be winners and losers. The winners are likely to be those businesses that invest in taking the right advice in order that they may better manage their cash and key stakeholders so that they can come through and maximise their chances of capitalising on the recovery.”
Azets supports around 120,000 clients across the UK and Europe. These include SMEs, large scale businesses, public sector organisations and private clients across a range of business industries.