Hospitality businesses show 'notable resilience' as insolvency risk stays flat

The risk of insolvency in hospitality sector businesses in Northern Ireland hasn't materially increased in the last six months according to R3
Gary McDonald Business Editor

HOSPITALITY businesses in Northern Ireland have survived the winter off-season relatively unscathed, and the risk of insolvency hasn't significantly increased, business restructuring trade body R3 has reported.

It says hotels, pubs and restaurants have seen their levels of elevated insolvency risk fall slightly or hold steady since the start of the year, demonstrating what R3 regional chair Steve Cave describes as "notable level of resilience".

But it comes as the Irish News understands that a prominent hospitality business in Belfast, which employs more than 40 full- and part-time staff, could be on the cusp of going into administration.

The long-established business is currently in talks with banks and advisers to see what can be salvaged, but it is believed a potentially negative announcement is due in the coming days or weeks.

According to R3's latest research, the proportion of hotel companies in the north deemed to be at greater than usual risk of insolvency in the next 12 months stayed flat over the first half of the year at 24.3 per cent.

The restaurant sector also stayed steady, with elevated risk levels of 35.1 per cent at present, while the levels of pubs at risk rose marginally over the first half of the year from 36 per cent in January to 36.6 per cent in June.

Tourism operators and travel agents saw a negligible percentage rise (0.3) in businesses judged to be at higher than usual risk over the same period, and looking across companies from all sectors, the percentage at above-average risk of insolvency was 36.8 per cent, flat on May numbers and just marginally unchanged from the December figure of 36.6 per cent.

Stephen Cave, director at PwC Belfast, said: “As Northern Ireland's hospitality and tourism companies gear up for the busy summer period, this research should provide some sunshine as it shows a notable level of resilience.

“But hospitality and tourism businesses are facing some headwinds, with the recent rises in the minimum wage, and the increase in pension auto-enrolment payments adding to many companies' staff costs.

“Hospitality businesses are more dependent on seasonal visitors than most, which often leads to problems in the off-season, and any company which encounters cash flow difficulties, or a structural change in its trading environment, should seek advice from a qualified and professional source as soon as possible.”

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