Hotels, bars and restaurants in the north-east risk collapse as the oil price crash causes a major drop in consumer spending, a specialist has warned.
Accountancy firm Campbell Dallas has said over 900 hospitality businesses in the region face a very difficult first quarter of 2016 with the risk that a “large number” could close.
Derek Forsyth, business recovery partner at Campbell Dallas said that even if the region’s bars and restaurants face a 10% closure rate, that would result in over 90 businesses ceasing to trade.
While January is traditionally a slow period for most leisure businesses, the effects are worsened due to the difficulties faced by the oil and gas sector.
He said: “Once the festive period is over business and income traditionally drops rapidly in January, however operational costs such as rent and overheads remain, leading to serious cash flow problems.
“The north-east has already suffered significant job losses during the last two years, but given numerous forecasts of further restructuring in the oil and gas sector, with downstream businesses likely to be affected, we could see a significant impact on the hospitality and leisure sector.”
His firm has launched a “hospitality helpline” to help companies facing difficulties in the next few months.
“It is very important that business owners plan ahead and ensure they are on top of their outgoings, whilst also trying to maximise and maintain their income. Quick wins include re-negotiating rent, searching for better deals on insurance and telecoms, reviewing staffing and shift patterns, and collaborating with other businesses on joint promotions,” he added.