Post-Budget fallout looms over UK insolvency reprieve
The hospitality sector continues to experience historically high levels of business collapse, despite a slight decline in overall insolvencies in the third quarter.
According to the Buchler Phillips Hospitality Index, compiled from monthly statistics made available by the government’s Insolvency Service, 2,657 venues ceased trading in the nine months to September 2024, down from 2,715 in the same period last year.
Companies falling into administration during Q3 this year included pub owner Antic Hospitality Group in July, Birmingham’s Cube Hotel in August and the UK operator of TGI Fridays in September, with the loss of more than 1,000 jobs.
However, company insolvency statistics released on 18 October showed that insolvencies in August 2024 were down 29% when compared to the same month in 2023.
Meanwhile, business insolvency claims fell slightly between August and September 2024 – a month-on-month decrease from 270 to 260.
Yet the overall picture is clear: the industry is experiencing significant pain due to inflationary pressures and declining consumer confidence.
“Make no mistake: it’s still brutal out there. Hospitality has always been a tough business and, in the current climate, any short term easing in the insolvency figures shouldn’t be seen as a sign of sunlit uplands for the sector. Recent budget changes won’t have helped,” said Jo Milner, MD of the independent insolvency, restructuring and turnaround firm.
Saxon Moseley, partner and head of leisure and hospitality at RSM UK, added: “While food and accommodation insolvencies fell for the third consecutive month, this may well be the calm before the storm following recent cost increases announced in the Budget and additional compliance changes under the Employment Rights Bill. The additional costs are set to put further pressure on operators’ already-stretched margins, meaning there’s likely to be more insolvencies to come.
“The hospitality industry is already in the doldrums, with subdued consumer confidence and people continuing to prioritise saving over spending. In the short term, operators will be hoping to make the most of the crucial festive season and build up a war chest of cash reserves, but that’s unlikely to be enough to see them through the raft of additional costs from April next year.”
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