According to the law firm Berg, the hotel sector is among the industries to have been worst affected by the interest rate swaps mis-selling scandal.
Hotels’ seasonal nature and their business models, which sees many operating with limited working capital, means they have suffered disproportionately from the financial products, Berg said.
Consequently, many are being forced out of business as they battle against monthly payments or contract breakage fees.
Alison Loveday, a managing partner at Berg, said: “Businesses of all types have been hit hard by interest rate swaps but hotels and others in the hospitality industry have really suffered. As we know, being a hotelier is difficult at the best of times; trade can be highly seasonal and margins thin.
“For businesses like these to suddenly be faced with huge costs because of financial products mis-sold to them can be crippling. Many simply don’t have the working capital to pay the large interest payments and similarly cannot afford the penalties to break the agreements.
“Against that background, it is no surprise that some are going out of business. The guidance from us is to seek professional advice immediately. We will investigate if there is a case for an interest rate swap being mis-sold by a bank which if pursued could result in a significant damages claim and/or assist in opening up a dialogue with the bank concerned.”