Insolvencies in the hospitality sector are up 5% year-on-year, with an expert warning the worst could be yet to come when the autumn Budget comes into practice this sprin
The struggling hospitality industry has faced another blow, after new figures have shown bankruptcies were up 5% in the year to September 2024.
Accommodation and food services insolvencies went up from 3,490 in the 12 months to September 2023 to 3,679 in the 12 months to the same time this year.
September saw 260 insolvencies in the sector, according to audit, tax and consulting firm RSM UK, compared to 270 in August. But it has warned this slight fall could be the “calm before the storm” before the effects of the autumn Budget hit the likes of restaurants, pubs, bars and hotels.
A number of Budget measures are due to kick in from April, such as a reduction in business rates relief from 75% to 40% and increases in the national minimum wage. Many in the sector argue these will put pressure on the already-stricken industry, which has struggled with factors such as soaring energy bills and attracting customers who have less money due to the cost-of-living crisis.
Saxon Moseley, partner and head of leisure and hospitality at RSM UK, said: “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. We expect to see a number of operators struggle to make ends meet in the New Year, with resourcing and pricing levers already pulled and little scope for further cost cutting.”
