Accountancy firm PricewaterhouseCoopers has released quarterly figures showing the number of insolvencies is on the increase and airline failures loom in 2009.
Already in 2008 insolvencies rose by a third year-on-year while 15 tour operators and travel agents failed in England and Wales in the final quarter of 2008 alone.
PwC’s quarterly insolvency figures reveal a steady increase in travel company failures since the early part of 2007. The final quarter of 2007 and Q3 of 2008 were particularly prominent because of the Travelscope and XL failures respectively. XL accounted for 11 of 24 companies entering insolvency.
PwC director Ian Oakley-Smith warned that even taking Travelscope and XL out of the equation the level of failures has been increasing.
“With around 30 airline failures forecast over the next year, those travel organisers operating under an ATOL will be expected to find alternative air travel for their customers. This kind of unexpected, financial outgoing could finish off a number of smaller companies.”
He added that the figures may just be the tip of the iceberg with travel and tourism typically experiencing a lag between the start of a downturn and the impact on the number of failures.
“Bookings or rather the lack of them over the next few months for summer holidays 2009 will determine the rate of failure for these businesses.”
The insolvency figures also painted a bleak picture for hotels with an increase in insolvencies of almost 100% in the final quarter of 2008, year-on-year.
According to the accountancy firm 36 hotel companies went into insolvency in the latter months of the year.