The number of travel and tourism companies facing “critical” financial problems has jumped 31% in the last quarter – more than twice as fast as the average across all industries.
A survey by insolvency specialist Begbies Traynor found that the total number of UK firms experiencing critical difficulties rose from 4,620 in the first quarter to 5,179 in the second, an increase of 12%.
The worst-affected sector was hotels and accommodation, which experienced an almost 50% rise in companies facing critical financial issues than a year earlier, according to the report.
The report said sectors reliant on discretionary spending had faced a steady increase in “critical distress” in the second quarter of 2011, despite the long easter break and extra bank holidays.
It said: “A significant proportion of the population are being squeezed by inflationary pressures and concerns over the security of their employment, and are therefore being extremely cautious with their spending – which is beginning to have a real impact on travel and tourism related businesses.”
Julie Palmer, partner at Begbies Traynor said: “Although banks remain supportive of struggling customers there are an increasing number of companies that cannot continue without significant new investment as costs cannot be reduced any further and sales demand weakens.”
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