Insolvencies in the hospitality and leisure sector jumped by 60 per cent in the third quarter compared with the same period last year, and the outlook for next year is even gloomier, according to figures released today by PricewaterhouseCoopers (PwC).

The number of business failures reached 281 during July, August and September, up from 175 last time and well ahead of the 220 insolvencies reported in the first quarter this year and the 212 recorded in the second.

But PwC is giving warning that the outlook is getting worse, with the hotel sector, which until recently had proved relatively resilient, likely to be among the worst-hit parts of the industry. A total of 18 hotel businesses failed during the quarter, up from ten in the same quarter last year but one fewer than in the previous quarter.

Stephen Broom, hospitality and leisure director at PwC, said the slowdown in trading in the second half of the year meant the prognosis for hotels was likely to get far worse. “As the downturn tightens its grip, it is easy to believe that what we have seen so far is just the tip of the iceberg for hotels.”

Mr Broom said that, with the exception of GuestInvest, the buy-to-let hotel operator, the hotel administrations had been individual properties, most of them smaller, unbranded units.

He said that the bigger groups were, for the most part, better placed to weather the storm than in the recession of the early 1990s, although he agreed that some of the bigger leveraged buyouts of the past few years could be at risk if the recent trading decline, which was especially marked last month, continued. “I'm sure there will be some more high-profile casualties as we go through 2009,” he said.

The worst-affected sector so far has been restaurants, which suffered 152 casualties in the third quarter, up from 102 in the previous three months and 111 in the third quarter last year. Pubs and bars recorded 64 insolvencies, broadly similar to the first two quarters but more than double the failure rate in the same three months of 2007. High-profile administrations this year have included The Food & Drink Group, the owner of the Jamies Bars chain, and Sports Café Holdings.

Mr Broom said that as discretionary spending declined, restaurants were increasingly turning to special offers to attract consumers, which in turn was having an impact on profitability.

In a separate report on the restaurant and bar sectors, BDO Stoy Hayward said that mounting food costs were putting tremendous pressure on margins, with meat, fish, wheat, barley, rice and dairy products costing significantly more than a year ago. BDO said that, despite the difficulty of raising debt funding, the blanket de-rating of quoted companies meant that several potential investors, including sovereign funds and high net-worth individuals, were looking at potential opportunities.

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