Has the hospitality industry survived the economic recession better than it could ever have hoped?

Have there been fewer insolvencies than the pundits forecast last year? Is hotel construction still moving ahead? And are branded restaurant companies still keen to expand?

The answer to all these questions is undoubtedly yes.

In the association's latest publication - British Hospitality: Trends and Developments 2009, which is sponsored once again this year by American Express - it's clear that the industry is still moving forward, despite a recession that is widely regarded as the worst in living memory.

Hospitality has survived better than in the downturn of the early 1990s when the biggest hotel companies were reputed to be the administrators operating hotels that had been forced into bankruptcy. Then, too many hoteliers had over-extended and over-borrowed. This time around, operators had learned that lesson.

True, restaurant companies have had their margins hit; so have hoteliers. Corporate business has fallen away. Special offers by both have boosted footfall and maintained leisure occupancy levels but at a cost to margins and profitability. So costs have had to be cut and staff numbers reduced. This has aided survival.

But hotel insolvencies so far (the coming winter period will be a testing time) have been few, as Trends reveals. Only 178 hotels in 2008 (but possibly more in 2009) is hardly a significant number in a sector with over 46,000 establishments. And though restaurant insolvencies, at 778 in 2008, are higher than in 2007, this is a sector that is notorious for failed businesses even in the best of times.

What is also encouraging is that almost every establishment that has gone into insolvency has re-opened under new ownership.

Furthermore, despite the recession, the hotel industry is continuing to expand with over 11,000 rooms opening in 2009 and a further 40,000 planned for the period 2010-2015.

Since the present boom started in 2003, over 85,000 new rooms have been added to UK hotel stock, just over half (55 per cent) in the budget sector - the biggest hotel construction period in the industry's history. The budget hotel sector, with nearly 6,000 rooms opening in 2009, is the biggest beneficiary of this boom. In 2001, there were 50,000 budget rooms, a figure which has risen to 105,000 in 2009.

Of course, the recession has had an impact and the recession is discouraging some investment. Over 30 hotel projects have been put on hold or abandoned because developers have either been forced into administration or have faced planning problems. Funding has been another issue. Some of these projects already had hotel companies lined up to operate the development.

And while refurbishment is continuing in existing hotels - the refurbishment of the Savoy Hotel, for example, now scheduled to reopen next Spring is costing over £100m - the abolition of the Hotel Buildings Allowance (HBA) was a blow that will deter many independent hoteliers from upgrading and modernising.

So the hospitality industry is not yet out of the woods. It will take a year or more for margins to improve. Consumers will be reluctant to accept higher prices when they have become accustomed to special offers and low-price deals. The continuing supply of new hotels will put downward pressure on prices on hotels that have not upgraded. Investment is the key to the future prosperity of the industry but it remains to be seen whether a new Conservative government - if elected - will reverse the present government's decision to abolish the HBA. The industry certainly shouldn't count on it.

But Trends shows that the industry has survived better than most people expected so far. There is a long way to go to get back to 2007 levels of confidence and profitability but we are on the way. Investment still needs to be encouraged in the independent sector. Standards must be enhanced, not just maintained. Value for money must be self-evident.

The next 12 months will be tricky but the industry has shown its ability to survive in the bad times as well as the good.

Members can click here to download a free copy of Trends and Developments 2009 by logging in to the members only area of the BHA website.

*British Hospitality: Trends and Development 2009 (price £250 - free to members) is sponsored by American Express. It is available either in hard copy or PDF format from the British Hospitality Association, Queens House, 55/56 Lincoln's Inn Fields, London WC2A 3BH (020 7404 7744)