West Midlands’ hotels are most improved businesses

THE West Midlands’ hospitality sector has received a boost as new research reveals that hotels top the list of the region’s most improved businesses in terms of financial security.

Figures compiled by insolvency body R3’s Midlands branch, using Bureau Van Dijk’s Fame database, show that the number of hotels with a higher than normal risk of insolvency fell in June for the third consecutive month to a total of 113 businesses.  

This is a pronounced turnaround from earlier this year, when February figures revealed a 15% increase in the proportion of hotels facing significant financial challenges.

The outlook is also improving for West Midlands restaurants.  Although June figures highlight a marginal increase of 0.3% in the proportion of operations deemed to be at higher than normal risk of insolvency, the percentage has decreased over the previous three months.  

Richard Philpott, R3’s Midlands region chairman and a partner at KPMG in Birmingham, said the hospitality sector’s move towards greater stability was very welcome. However, he advised businesses to remain cautious.  

“These statistics are beginning to paint a positive picture for the West Midlands, particularly as we embark upon the busy holiday season. The vast majority of hospitality businesses are well placed to capitalise on a surge in demand,” he said.

“But while the sustained economic recovery and this quarter’s uplift for hotels and restaurants is encouraging, there is still significant uncertainty in the marketplace. It’s important for all business owners to plan ahead and monitor cash flow carefully, resisting the temptation to over trade.

“If cash flow becomes a major issue, it’s absolutely crucial that directors seek professional advice before it’s too late.”