Leisure sector in distress warning

Businesses across Yorkshire's leisure and hospitality sectors have suffered significant levels of business distress in the run up to the European Referendum vote, it was claimed today.
The sheltered fishing village of StaithesThe sheltered fishing village of Staithes
The sheltered fishing village of Staithes

Pre-Brexit insecurities have been attributed for the sector enduring an escalation in financial difficulties of 13 per cent in the last three months, compared to the same period last year, according to data released today by business rescue and recovery specialist Begbies Traynor.

Financial problems in the second quarter of 2016 saw Yorkshire’s hotel and accommodation businesses report a rise in significant distress of 14 per cent on the same period in 2015.

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For the region’s bar and restaurant trade distress levels were up by 11 per cent with cultural and leisure organisations seeing a five per cent rise.

The worst affected area according to the Begbies Traynor data was the region’s sport and health sector, which had encountered significant distress levels was up by more than a quarter, with a 28 per cent rise.

In total, 17,046 firms in Yorkshire showed instances of significant business distress in the second quarter of the year.

The figures confirmed that once again small businesses are bearing the brunt of the hardship, with 94 per cent of all distress in Yorkshire reported by SMEs.

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However the region’s tourist body Welcome to Yorkshire said the figures did not match the feedback they had from members and that visitor numbers were buoyant.

Begbies Traynor said that effect on the region’s leisure sector has not been mirrored across the Yorkshire economy as a whole.

Its data, published in its quarterly Red Flag Alert update shows that the most common, or ‘significant’, indicators of business distress have risen just 2 per cent year on year in the region, compared to a 20 per cent year-on-year increase in the previous quarter.

The rise in Yorkshire is just one per cent higher than the UK average.

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Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “Yorkshire’s tourist economy has taken big strides forward in recent years, with events like the Tour de France Grand Depart in 2014 really putting us on the map and boosting visitor numbers, but the worry is that a sharp drop in consumer spending will be bad news for small businesses in the sector, which are often ill prepared for prolonged periods of adversity.

“It’s worrying that Yorkshire’s leisure and hospitality sector as a whole seems to have been dealt something of a body blow in the last three months,

“Significant distress is often seen as an early warning signal of more severe financial problems to come, which can lead to business failures.

Sir Gary Verity, Chief Executive of Welcome to Yorkshire said: “The findings of the Begbies Traynor survey do not reflect the experience of our members at all who are continuing to see strong visitor numbers.

“According to Visit Britain the last two years have been the best on record for inbound visitors to Yorkshire and this trend is continuing into 2016.”

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