In the last 12 months, company insolvencies have increased in the hospitality sector more than in any other sector, according to the latest insolvency figures for England and Wales. In fact, the sector comprises 16% of all recorded company insolvencies in the same time period.
Oliver Collinge, Director at restructuring and insolvency firm, PKF Littlejohn Advisory, says: a high cost of doing business, compounded by constrained consumer spending is hitting the industry hard in a competitive and ruthless economic environment.
“The sector has been one of the worst hit by cost inflation over the last few years; whilst this has reduced considerably this year, the impact on balance sheets lingers. Energy prices also remain far higher than they were before 2022. In addition, although the sector has experienced stronger demand this year driven by real wages growth, the poor spring and summer weather has dampened this effect. The combination of these factors means that many businesses in the sector are still struggling.
“It’s crucial that businesses act early and seek advice if they are struggling, or if they expect their cashflow to be restricted in the coming months. The earlier they act, the more options they will have to secure the long-term survival of their business.”
