The number of hospitality businesses entering insolvency rose in the first half of 2024 during a difficult period for the industry.
Some 1,801 accommodation and food service companies, including hotels, restaurants and pubs, closed in the six months to June 2024, up from 1,776 in the same period last year, according to government data.
Offering little cheer, the number of hospitality insolvencies increased by 13% between May and June this year.
The Buchler Phillips Hospitality Index of insolvencies, which has tracked monthly figures since January 2014, rose from 204.3 to 231.6 in June. It peaked in August 2023 at 273.4 with a spike in the sector’s business closures.
Jo Milner, Managing Director of the leading turnaround and restructuring firm, said:
“We’ve come a long way from last year’s tough summer when the hospitality sector was feeling the worst effects of higher energy prices and the cost of living crisis, but we’re not out of the woods yet: inflation is struggling to stay down after its fall this year and wage costs remain high.”
Hotel demand in major UK cities was lifted to a certain degree in June by Taylor Swift’s earlier concert dates on these shores. However, a soggy start to the summer is expected to have dampened the boost for the industry overall from sporting events such the Euros, which will appear in figures for July, released next month.
Hospitality operators are hoping that a more development-friendly approach to planning under the new government will help in the longer term, offsetting the potential for higher minimum wages to squeeze margins further. For now, hopes are pinned on October’s Autumn Budget to provide some relief on business rates or VAT.
Buchler Phillips Hospitality Index (BPHI)
The BPHI is compiled from monthly company insolvency statistics made available by the UK Government’s Insolvency Service. Using a base of January 2014 = 100.0, the index tracks the sector classification of Accommodation and Food Service Activities.