A decade of hotel expansion across London and the South of England is set to be reversed as many hotel businesses struggling with unsustainable debts, losses and staffing problems decide to close permanently, a restructuring expert is warning.
Citing industry reports indicating the scale of the financial and resourcing problems affecting the sector, Matthew Richards, partner, restructuring, in Azets’ London office, said that it is entirely possible that 10% of hotels in London could be forced to shut permanently by 2023.
Richards said: “UKHospitality recently reported that the sector has £2.5bn in rent arrears alone due to the pandemic, further compounding the millions of pounds borrowed through the various Covid loan schemes made available last year. In addition, the latest survey from Market Recovery Monitor has disclosed that nearly 10% of UK restaurants have closed since the pandemic. The hotel sector is probably going to be just as severely affected during the next 18 months.
“While many people are planning to staycation due to the difficulties of overseas travel during the pandemic rather than go abroad, unfortunately, the sector is now facing an unprecedented set of problems that is almost certainly set to cause long term strategic damage to the hotel and hospitality sector in the South and South East of England.
It would be entirely reasonable if several hotel operators, owners and entrepreneurs decide that the problems are insurmountable and close their businesses. If 10% of hotels close, it will have a serious impact on local urban and rural economies given the importance of the sector in terms of employment, investment and the cohesive role hotels play in local communities.”