Monthly rise in hospitality insolvencies an early warning sign for the sector

Today’s company insolvency statistics show accommodation and food services insolvencies were down 13% to 327 in November 2024 when compared to 375 in November 2023. However, insolvencies in the sector jumped 29% month-on-month from 253 (October 2024) to 327 (November 2024).

Saxon Moseley, partner and head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said: “As the first month of insolvency data since Rachel Reeves’s Budget in October, the month-on-month rise in insolvencies in November could be an early warning sign of what’s to come for the hospitality industry. The tax rises set to hit operators from April are likely to be the final straw for some. 

“The lowering of the threshold for employers’ National Insurance contributions (NIC) is particularly damaging for the sector, given its reliance on part-time and casual workers. The unintended consequence could be that employers focus on utilising their existing workforce and full-time workers instead, putting younger individuals or those with caring responsibilities at a disadvantage.

“Despite households sitting on record savings, the consumer-led recovery that many operators are hoping for hasn’t come to fruition yet. Those that are able to ride out the storm and navigate the hurdle of NIC changes in April will be well positioned to take advantage of the expected uptick in consumer confidence later on in the year. There will also be consolidation opportunities for well capitalised operators as they look to grow and bring efficiencies through strategic acquisitions.”