ALMOST a fifth of hotels in Yorkshire are “at risk of failure” according to a shock report.

Research by insolvency trade body R3 claimed that 19.75% of hotels in the region could go under during the next 12 months. Nationally, the figure stands at almost 21%.

The warning follows the news that MWB Group, the company behind Hotel du Vin and Malmaison, is set to appoint administrators this week.

R3 said the hospitality sector faced significant financial pressures – underlined in September when budget hotel chain Travelodge was narrowly saved from administration after landlords agreed to a rent reduction.

R3’s research indicates that as many as 22% of companies in the industry are classified as “zombies” – only able to pay the interest on their debts – compared to an average across all industries of just under 10%.

Chris Wood, Yorkshire R3 committee member and partner at Clough Corporate Solutions in Cleckheaton, said: “The hospitality and leisure sectors have been among the worst affected when it comes to corporate insolvency.

“Not only are many of them suffering from the legacy of pre-recession rent levels, but they have also been a victim of the fall in consumers’ discretionary spend, combined with another wet British summer with bookings further depressed by concern over Olympics disruption.”

He said: “The proposed administration of the company behind Hotel du Vin and Malmaison shows that financial distress is being felt at all levels from budget chains through to luxury hotels.

“In Yorkshire and the Humber, of the 400 hotels identified, 79 are classed in the overall negative band, indicating that these businesses may be at risk in the next 12 months.

“It is, of course, in no way inevitable that companies showing these risk signs will fail, particularly if the right steps are taken quickly.

“We advise all businesses facing financial difficulties, or indeed the prospect of such difficulties, to seek advice at the earliest possible stage. With the traditionally busy Christmas period fast approaching, let us hope that it provides a much-needed boost for hotels after another tough year.”