Business debt up as level of distressed hotels and restaurants keeps rising

According to Business Intelligence experts, Christie & Co, the hotel industry has seen a staggering 88% increases in the level of distressed hotel businesses sold during the last quarter, when compared to the previous year. The number of distressed restaurant sales doesn’t fare much better and were also up by some 67%.

Steve Rodell, of Christie & Co, was quoted as saying: “Whilst a voluntary exit is usually preferable our evidence shows that businesses can still attract significant numbers of buyers even when tainted by financial distress, which is often caused by over leveraging.

“Many businesses have already faltered as a result of the tough economic climate, and many more are expected to fall by the wayside over the next six to 12 months. However, as our data shows, distressed assets continue to appeal to experienced operators and those looking to start their first business, with a marked rise in buyers returning to the market during 2010.

With the UK tourist trade pinning many hopes on the 2012 Olympics and 2011 Royal Wedding resulting in a national surge, and not just a boost in London, and with general economic uncertainty likely to remain for some time, it is difficult to see how UK hotels and restaurants and in turn their creditors can sleep safe just yet.

Poor Cash flow cripples healthy businesses, never mind those that have such seasonality as the tourist industry. So whether you are an operator in the industry and are worried about your own credit management policies, or you supply to the trade, speak to CCDR and we can discuss putting in place, robust credit control systems to ensure that instances of poor cash flow as a result of late or non payment are minimised.

Although easier to implement preventative measures to manage the credit control function, CCDR also offers debtor tracing, ongoing business reports, and the more reactive services of commercial debt collection and debt recovery should the circumstances warrant them.

For more debt industry blog posts read our blog here, or speak to Corporate Credit Debt Recovery for further details of how we can reduce your debtor days.

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