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Hospitality insolvencies jump 16%

The firm noted that there has been no let-up in tough trading conditions over the past year, as hospitality continues to suffer from closures across the UK.

The figures make for sobering reading. According to the statistics, accommodation and food service insolvencies increased 16% across a 12-month period, rising from 3,292 in the 12 months to July 2023, to 3,822 in the 12 months to July 2024.

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“The insolvency figures highlight the continuing impact of some really tough trading conditions for the leisure and hospitality sector,” Saxon Moseley, head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said.

“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.”

Aside from pubs, leisure activities had an underwhelming summer due to poor weather and slow-to-recover consumer confidence. The trading environment therefore remains particularly challenging, especially for mid-market operators, with rising wage costs and food inflation not being matched by increased customer spending, Moseley said.

The Bank of England’s decision to hold interest rates at 5% this week will also frustrate some businesses as this continues to keep interest payments higher on Covid loans, which many operators took out to survive the pandemic.

“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,” Moseley concluded.

• On-Trade
• hospitality
• Insolvencies