Research has found that hospitality insolvencies jumped by 16% in the year to date, with the sector also being named the second-most hit by debt concerns.
The government’s Company Insolvency Statistics found that accommodation and food service insolvencies increased by 16% to 3,822 in the year to July 2024.
‘Beverage serving activities’ fared better than the whole sector, with insolvencies jumping by 8.3%, from 699 to 757.
Saxon Moseley, head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said: “Today’s insolvency figures highlight the continuing impact of some really tough trading conditions for the leisure and hospitality sector.
“These numbers show just how critical the upcoming budget will be for businesses that continue to struggle against a backdrop of economic headwinds, particularly in terms of food inflation, increasing wage costs and high interest rates.”
Recent figures from the Office for National Statistics (ONS) found that UK debt had reached 100% of gross domestic product (GDP), the highest level since 1961.
Outreach service Sopro analysed the ONS data and found that 8.6% of accommodation and food service businesses had low confidence about meeting debt obligations, ranking second of all industries after real estate.
Sopro also found that 33.3% of hospitality businesses are facing increased staffing costs, the highest of any industry.
Many organisations are calling on the UK government to support the industry in its upcoming budget (on 30 October). The Night Time Industries Association has asked for an extension of business rates relief following the news that the UK has lost 65 nightclubs already this year, while the Wine & Spirit Trade Association has urged an alcohol duty freeze.
Adding to these calls, RSM UK’s Moseley said: “While confidence has been slowly improving, recent news of potential tax rises in the autumn has dented the mood of the nation’s consumers.
“The fiscal measures we will see unveiled on 30 October will not only determine the long-term viability of many businesses, but it will also define medium-term consumer spending, which in turn could either help save businesses or be the final nail in the coffin.”
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