Hospitality insolvencies drop to two-year low

The number of hospitality companies entering insolvency has hit a two-year low, but operators are braced for more challenges.

Government data shows there were 253 accommodation and foodservices company insolvencies in October 2024, down 24% on the 332 in October 2023.

Insolvencies in the sector also saw a month-on-month drop from 261 in September this year.

There were a number of high-profile independent closures earlier in the year, including Simon Wood’s Wood Manchester, Nick Nairn’s Nairn’s in Bridge of Allan, Stirling, as well as Liz Cottam’s Home and Michael O’Hare’s Psycho Sandbar, both in Leeds.

Saxon Moseley, partner and head of leisure and hospitality at audit, tax and consulting firm RSM UK, said: “An early Christmas present for operators as insolvencies hit the lowest level in two years and continued a downward trend since the summer. With the festive trading period well underway, operators will be hoping to build up some reserves to help mitigate the impact of looming cost increases.”

However, Moseley said taxes announced in the autumn budget, including a rise in employers’ National Insurance contributions and the National Living Wage, could see more businesses struggle next year.

“The industry is bracing for a wave of post-budget headwinds with employment costs increasing and additional compliance changes under the Employment Rights Bill,” he added.

“For vulnerable businesses already struggling to make ends meet, this could well be a step too far and we expect to see an uptick in insolvencies across the industry next year as a result.

“This backdrop will create consolidation opportunities for operators looking to strengthen market position through strategic acquisitions and bring efficiencies to respond to the budget measures. In addition, as further pressure is applied, distress deals will drive a further wave of consolidation in 2025.”

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