Hotel insolvencies are on the rise.

The number of hotel insolvencies has soared in the last 12 months despite a growth in the number of people holidaying at home – the staycation – and the weak pound, says accountancy firm Wilkins Kennedy.

In the 12 months to 31 December 2009 122 hotels went bust – including compulsory liquidations, receiverships, administrations and company voluntary arrangements – up by 61% compared to a figure of 76 in the previous year.

The accountancy firm said that a continued slump in business travel and a reluctance of banks to lend to the hotel sector has had a damaging effect on the industry.

Anthony Cork, Director of Wilkins Kennedy, commented: “2009 was marked by a strict tightening-up of corporate budgets, which led to massive curtailing of business trips, conferences and team building events.

“Staycation and the weak pound might have helped increase the number of visitors during the holiday periods, but unfortunately, this hasn’t translated into the increased spending that hotel owners had hoped for because customers cut back on their length of stay and extras, such as spas and room service.”

2010 has not got off to the best start as the extreme weather hindered travel across the UK and the volcanic ash cloud caused major disruption to air travel.

“The net long term effect of the volcano ash crisis is difficult to call, but if it speeds the shift to video-conferencing and other new forms of communication rather than face-to-face meetings, this will have another negative impact on the corporate travel segment.”

Hotels in the US are suffering a similar fate according to the latest research from PKF Hospitality Research (PKF-HR). It reported this week that the average US hotel suffered a 34.5% drop in profits in 2009 – the greatest fall since the 1930s.

“Declines in revenues make the headlines, but the bottom line is where the rubber meets the road for owners. The 34.5% decline in profits realised in 2009 has severely stressed borrower/lender relationships throughout the country as delinquencies, defaults, foreclosures, and bankruptcies continue to escalate.”

Of the sample used in PKF-HR’s research, 95% of hotels experienced a decline in room revenue and total hotel revenue from 2008 to 2009.

Mr Cork added: “Until confidence takes a firmer hold and business travellers come back in greater numbers, things are likely to remain tough for the hotel sector.”