According to the figures, released today (19 July), hospitality insolvencies rose to 3,752 in the 12 months to May 2024, up from 3,133 recorded in the 12 months to May 2023.
As well as recording the highest year-on-year increase, the data shows that accommodation and food service activities saw the third highest number of business insolvencies in any industry over the period, pipped only by construction (4,287 insolvencies recorded), and wholesale and retail trade (3,811 insolvencies recorded).
“Today’s insolvency figures highlight just how difficult the last 12 months have been for the leisure and hospitality sector,” says Saxon Moseley, head of leisure and hospitality at leading audit, tax and consulting firm RSM UK.
“Businesses continue to struggle against a backdrop of increasing wage costs, stubborn food inflation and high interest rates.
“While consumer confidence is slowing improving, the unseasonably cold and wet weather has had a devastating impact on trading in the first half of 2024.”
In more positive news for the sector, month-on-month figures show insolvencies across the sector down 9% in May compared to April, according to RSM.
“Sporting events such as the Euros will have helped the industry, but sadly it hasn’t so far been the bumper summer that operators were hoping for,” continues Moseley.
“For some, it won’t have been enough to keep them afloat.
“This week’s King’s Speech gave some hope to the hospitality industry, with anticipated reforms to apprenticeships, a more streamlined planning system for the development of news sites and laws to improve safety at late night venues. But proposed changes to zero-hour contracts, employee rights and further minimum wage increases will likely place further pressure on margins.
“With no mention of business rates reform or VAT reductions for the industry, many will be looking for support in the Autumn Budget to slow the rate of insolvencies in the sector.”