Hotel failures jump 61%

Rose Bowl Hotel

Rose Bowl Hotel

The number of hotel firms going bust jumped last year by 61%, accountancy firm Wilkins Kennedy has said as the benefits of the weak pound and the ‘staycation’ summer were offset by the slump in business travel.

Hotel chains to go under last year included McKever Hotels, Folio, the Real Hotel Group, Comfort Inn, Quality Hotel and Purple Hotels.

The report said that despite the weak pound and many people holidaying at home, the hospitality sector remained weak.

Anthony Cork of Wilkins Kennedy, said that the insolvency rate in the sector was a reflection of the tightening of corporate budgets, leading to:

“A massive curtailing of business trips, conferences and teambuilding events … Staycations and the weak pound might have helped to increase the number of visitors during the holiday periods, but unfortunately this hasn’t translated into the increased spending that hotel owners had hoped for as customers cut back on their length of stay and extras.”

Mr Cork also warned that there is also a shift in the business sector away from meetings and conferences towards:

“Video-conferencing and other new forms of communication rather than face-to-face meetings”

The news of a slump in hotel usage by the corporate sector will be a cause for concern to the Eastleigh council taxpayers who are opposed to the building of a luxury hotel at the Rose Bowl by Eastleigh Borough Council

The council have borrowed £32million to fund the 4-star resort hotel containing a luxury spa as well as major conferencing facilities – after banks decided it was too risky.

A group of local hoteliers are fighting the plan which they say threatens their businesses.

Speaking last November, hotelier Moez Mohamed told the BBC:

“The council has not had proper regard to the financial risks and the current economic realities, and instead appears to be proceeding on the basis that there is no risk whatsoever to the local tax payers.”

Do you still think the funding of a luxury hotel by local taxpayers is a good idea?

  6 comments for “Hotel failures jump 61%

  1. Keith House
    May 3, 2010 at 11:14 pm

    Eastleigh residents can be reassured that the project the Council is embarking on does not risk Council taxpayers’ funds – it is a commercial investment in the same way that the many shopping, leisure, office and other hotel investments that the council has made over the years are.

    The Borough Council has won praise from national watchdog the Audit Commission for its property investments. These have allowed the council to protect services and keep council tax below inflation for seven years at a time when other councils have cut services and increased taxes.

    Cllr Keith House
    Leader, Eastleigh Borough Council

    • mm
      Eastleigh Xpress
      May 4, 2010 at 12:13 am

      I am not suggesting that Council tax payer’s funds have been used to finance the project.
      It’s understood the capital has been raised through ‘prudential’ borrowing.
      However a debt has been created which must be serviced and eventually repaid.
      The liability for the debt rests with the council tax payer and not with the owner of Hilton Hotels – the Blackstone group – who easily have the funds to finance this – but don’t want to.
      (They are currently working on a bid to buy a bank instead.)
      It would a brave man to say this carries no risk and is guaranteed not to fail or impose any future burden on the tax payer.
      The Audit Commission are not in the hospitality business and I tend to give greater weight to the opinions of those that are.
      Banks are steering clear of hotel construction not just because of the effects of the downturn on trade, or because changes in technology and social media are changing the way corporations do their business – but because the value of the underlying assetts – the property – are overvalued.

  2. Matthew Myatt
    May 4, 2010 at 11:50 am

    Eastleigh residents can be reassured that the project the Council is embarking on does not risk Council taxpayers’ funds – it is a commercial investment in the same way that the many shopping, leisure, office and other hotel investments that the council has made over the years are.The Borough Council has won praise from national watchdog the Audit Commission for its property investments. These have allowed the council to protect services and keep council tax below inflation for seven years at a time when other councils have cut services and increased taxes.Cllr Keith HouseLeader, Eastleigh Borough Council  (Quote)

    You are having a laugh Mr House. ‘NO RISK..!!’ You really are trying to con the people of Eastleigh and I think they will see right through your BARMY comments and BARMY plans. You can fool some of the people some of the time..

    More BARMY Lim Dem rubbish.

    Wake up Eastleigh, time to end this BARMY man’s dictatorship over Eastleigh people.

  3. Peter Stewart
    May 5, 2010 at 11:54 am

    Come on chaps! There is a bigger picture here. Just because a few companies don’t have the foresight or interest to invest in this hotel, does NOT mean it is a bad investment. Casting my political bias aside for a moment I think the Council has made a shrewd move here and this hotel WILL succeed and WILL successfully promote Eastleigh. Of course Eastleigh must be PROMOTED if it is to succeed in rebuilding its manufacturing base!

    Remember EVERY potentially great business investment carries a risk but ALSO great opportunity! With a positive attitude we can all reap the benefits of this investment.

    I’m old enough to remember Britain when people were not condemned for taking a risk. That was before my own Tory party allowed us to be annexed by a foreign power (the EU) since when things have got to the stage where we will soon all be wearing fluorescent yellow jackets and hard hats!

    Come on chaps! Taking risk is what made Britain great. Taking risk gave Eastleigh Pirellis cable works, the Railway Carriage Works and Ford.

    So look on the positive side and let’s all work together to promote Eastleigh to make it a successful manufacturing town again.

    • mm
      Eastleigh Xpress
      May 5, 2010 at 12:18 pm

      I predict Keith House buys you a drink Thursday night. ; )

    • Matthew Myatt
      May 5, 2010 at 10:31 pm

      Risk in business is all well and good with private investment and private company money. Using TAX payers money is wrong and why the hell should I have to pay if this fails.. I think you make a good point Peter but you need to understand who is taking the risk here.

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