Travel firm insolvencies inevitable
by Gill Montia
Story link: Travel firm insolvencies inevitable
The UK’s travel sector is facing severe economic headwinds, with a 49% increase in companies suffering “critical” financial distress, compared with this time last year.
According to Begbies Traynor’s latest “Red Flag Alert”, further insolvencies in the sector are inevitable.
Putting aside the sharp annual rise in “critical” cases, the third quarter of 2011 saw a 29% increase in companies facing “significant” financial distress, compared with the previous three month period.
The insolvency specialist’s partner, Julie Palmer, comments: “Cash reserves at travel and tourism companies are typically at their lowest levels during the 4th quarter so the rise in distress during Q3 is a real warning signal to the industry.
“Consumers are reining in their spending but this responsible behaviour is actually nullifying any attempts by policymakers to boost spending in the UK.
“In the past quarter, sectors reliant on consumer discretionary spending are bearing the brunt of an increase in levels of ‘significant’ financial distress with a 29% increase hitting the Travel and Tourism sector.”