East Anglia: Hospitality sector leads the way as financial strength of region’s businesses improves
- Credit: Roger Adams
East Anglia’s hotels, pubs and restaurants have led the way over the last 12 months in becoming more financially secure, according to research by insolvency trade body R3.
Hospitality is among the most improved sectors in the region in terms of the average risk of a company becoming insolvent, based on a range of factors including turnover, pre-tax profit, working capital and bank deposits.
More than three quarters (76%) of hotels, restaurants and bars in East Anglia have seen their risk of insolvency fall after the past year, according to R3
The finding is consistent with a number of studies indicating that tourism-related businesses in Suffolk have had a good summer season, with the climax of this year celebrations marking the centenary of the composer Benjamin Britten delivering a further boost.
However, R3 says that manufacturing and construction have also fared comparatively well, with 73% of manufacturing businesses lessening their insolvency risk over the past year together with 71% of construction firms.
Shay Lettice, R3’s eastern region chairman and a partner at East Anglia accountancy firm Peters Elworthy & Moore, said: “These statistics are highly encouraging for East Anglia, where tourism and hospitality operations have taken a big hit over recent years.
“A summer of excellent weather, combined with the beginnings of a sustained economic recovery, appears to be giving this sector a very welcome boost.”
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The Administrative & Support Services sector, which includes car rental, human resources and cleaning activities, saw the highest proportion of “fast improvers” in the private sector, with more than one in 10 businesses seeing their risk of insolvency fall by more than 20%.
The positive economic picture in East Anglia is echoed by R3’s recent Business Distress Index, which charts company performance across the UK. The research found that only around one in five (22%) of companies in the region disagree with the Chancellor of the Exchequer’s recent statement that the UK economy has moved from “rescue” to “recovery” ? one of the lowest percentages in the country.
Mr Lettice added: “An improving economy should see these figures continue to get better, but it is important to avoid complacency. The early stages of an economic recovery can be difficult as there is the danger of a business expanding beyond its capability. Entrepreneurs need to be patient and make sure they can walk before they try to run.”