Hospitality insolvencies climb 20% in May

Unseasonal cold and wet weather impacted trading in the first half of 2024.

Accommodation and food service insolvencies increased by 20% in May compared to the same time last year but down month-on-month by 9%, government statistics show.

In April, insolvencies increased 27%.

Saxon Moseley, head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said that today’s insolvency figures highlight just how difficult the last 12 months have been for the leisure and hospitality sector as businesses continue to struggle against a backdrop of increasing wage costs, stubborn food inflation and high interest rates.

“Whilst consumer confidence is slowing improving, the unseasonably cold and wet weather has had a devasting 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. For some, it won’t have been enough to keep them afloat,” Moseley said.

“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.”