Industry insolvencies soar by 20%
The year to May 2024 showed there were 3,752 insolvencies – up compared to the 3,133 recorded in the same period to May 2023, according to data from the Office of National Statistics (ONS).
This meant the hospitality sector, which the ONS called the accommodation and food service activities, experienced the third highest number of insolvencies.
However, month-on-month insolvencies were down 9%, the data revealed.
Ongoing struggle
The figures highlight the difficulty of the past 12 months for the leisure and hospitality sector, according to audit, tax and consultancy firm RSM UK.
While sporting events and potential reforms mentioned in the King’s Speech have been glimmers of hope for the sector, other legal changes are likely to increase pressure on margins, the firm outlined.
Head of leisure and hospitality Saxon Moseley said: “Businesses continue to struggle against a backdrop of increasing wage costs, stubborn food inflation and high interest rates.
“While consumer confidence is slowly improving, the unseasonably cold and wet weather has had a devastating impact on trading in the first half of 2024.
“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 and for some, it won’t have been enough to keep them afloat.
Further pressure
Moseley said: “[The] King’s Speech gave some hope to the hospitality industry, with anticipated reforms to apprenticeships, a more streamlined planning system for the development of new 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.”
However, with no mention of VAT cuts or reform to the business rates system, many operators will be looking for support from the Autumn Budget later in the year to help slow the rate of insolvencies, Moseley added.
