The number of hospitality businesses entering insolvency eased slightly in 2024, yet remained historically high, reflecting challenging trading conditions for the industry.
Some 3,464 accommodation and food service companies, including hotels, restaurants and pubs, closed in the twelve months to December 2024, down 7% from 3,737 for 2023, according to government data. Q4 saw a 6% improvement over Q3, with 804 companies in trouble.
Offering little cheer, the number of monthly hospitality insolvencies has remained consistently over 220 during this year.
The Buchler Phillips Hospitality Index of insolvencies, which has tracked monthly figures since January 2014, softened from 186.4 in September to 175.3 in December. It peaked in August 2023 at 273.4 with a spike in the sector’s business closures.
High profile operators closing high street units have included Chipotle and Itsu. Tapas chain Iberica was sold out of administration, while Simon Rimmer’s famous Manchester-based vegetarian business Greens collapsed owing more than £500,000.
Jo Milner, Managing Director of the leading turnaround and restructuring firm, said:
“A chill wind is still blowing out there. Hospitality will remain near the top of the insolvency table for the foreseeable future, certainly while budget changes continue to kick in and the sector adapts.”
Hospitality businesses face an estimated £3.4bn of additional costs, not least because of the increase in employers’ National Insurance contributions. Industry leaders have warned of the need for operators to rise prices by 6% to 8%, against a background of already weak consumer spending.
More than three-quarters of a million hospitality employees will have been shunted into employers’ NIC for the first time.