Hospitality insolvencies fall after strong summer trading

The number of hospitality businesses entering insolvency dropped 19% over the summer as warm weather boosted trading.

There were 265 accommodation and food service company insolvencies in August this year, according to government data.

This was down from the 327 insolvencies recorded in July, which was the highest monthly figure since November 2024.

Saxon Moseley, partner and head of leisure and hospitality at audit, tax and consulting firm RSM UK, said the drop was likely only a temporary relief to the industry.

“This was likely helped by good weather over the summer, encouraging consumers to go out and socialise, which led to GDP growth of 1.2% in the sector in August. But with food inflation really biting and challenges passing on further cost increases, it’s unlikely this decline in insolvencies will continue,” he said.

“Not only are operators having to factor in higher National Insurance costs, but wages in the food and accommodation sector also hit a record high in August, as operators try to hold onto staff. This combination results in a double whammy for businesses who are caught paying higher hourly wages and more tax on these payments.”

Moseley said many in hospitality would now be looking to the Christmas ‘golden quarter’ as a chance to boost their sales.

However, he said many in the industry faced a nervous wait to see what measures Chancellor Rachel Reeves introduces in the Autumn Statement on 26 November.

UKHospitality has warned the industry is on track to have lost 111,000 jobs in just over a year by the end of November due to the impact of tax rises announced in the 2024 Autumn Statement.

Moseley added: “The hospitality sector will be nervously waiting to see what measures are announced in the budget. There’s an opportunity for government to use the budget as a tool to kickstart the UK economy, but to do that, we need to see investment in the right areas and measures that foster confidence without driving inflation.”

Image: Shutterstock