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Drop in hospitality insolvencies ahead of Budget masks ongoing difficulties

According to Company Insolvency Statistics released on 18 October, insolvencies were down 29% when compared to the same month in 2023. That year, 380 businesses ceased trading in August due to financial difficulties.

Nevertheless, insolvencies in the sector increased 9% in the year to August 2024 (from 3,419 in the 12 months to August 2023, to 3,712 in the 12 months to August 2024).

• Read more: Hospitality sector lobbies government ahead of Autumn Budget

The beleaguered hospitality industry has faced a perfect storm of high inflation and chronic staff shortages over the past two years, while still in recovery from the pandemic.

Meanwhile, 170 CEOs have sent an open letter to the Chancellor, requesting that the government “fix business rates and prevent bills quadrupling for high streets across the country”.

Saxon Moseley, partner and head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, commented: “The monthly decrease in insolvencies will be welcome news for the industry. Hospitality businesses have experienced slow but steady revenue growth over the summer, while staff vacancies, food costs and services inflation have all reduced in recent months, pointing towards an easing of margin pressures which have put operators under significant strain.

“However, already this month businesses have had to factor in the new tipping legislation as well as get to grips with proposed changes to workforce practices under the Employment Rights Bill. There are growing concerns about how the Budget will impact consumer confidence and the cost of employing staff, which could have a detrimental impact on the sector. As an industry that employs a vast number of staff, any employment-related changes risk disproportionately impacting the sector.”

• Restaurants
• Bars
• pubs
• hospitality
• closure
• Autumn Budget 2024
• Company Insolvency Statistics