This week’s company insolvency statistics show accommodation and food services insolvencies were down 7% year-on-year from 3,737 in 2023 to 3,464 in 2024, and fell 29% when compared to the same month in the previous year (315).
Insolvencies in the sector saw an even bigger drop month-on-month, down 31% from 327 in November 2024 to 224 in December 2024.
However, this follows a 29% month-on-month rise in hospitality insolvencies between October and November 2024.
“For some operators, December would have been the last roll of the dice to take advantage of the festive trade and build up a war chest of reserves,” says Saxon Moseley, partner and head of leisure and hospitality at RSM UK.
“However, there’s caution ahead, as operators try to juggle fragile consumer confidence, plus a deluge of upcoming tax and regulatory changes which are set to see operating costs surge.
“Struggling businesses may have been able to limp through the busiest month of the year in December but with cost increases on the horizon, some may be weighing up their options.”
Hospitality businesses face a double whammy of tax rises this year as a result of the Autumn Budget with employers facing a rise in National Insurance contributions (NICs) and a cut in business rates support in April.
The minimum wage will also rise.
Moseley adds that with real wages now growing at 2.5% – the fastest rate in four years – this should eventually feed through to higher household consumption and provide a boost to the hospitality industry.
“Businesses that can hold on and weather the storm of National Insurance rises will reap the benefits of an uptick in consumer spending which is expected to come later this year,” he says.