The latest insolvency statistics from the Government, released earlier this week, showed liquidations in the accommodation and food service industry fell 7% in the 12-months to January 2025, from 3,747 in January 2024 to 3,474.
However, insolvencies in the sector increased 21% month-on-month, from 225 in December 2024 to 273 in January, and were up 3% when compared to the same month last year (265).
While experts commented the annual numbers were “not as bad as feared”, the overall data suggested “resilience” could be slipping.
Period of uncertainty
RSM UK head of leisure and hospitality Saxon Moseley said: “Hospitality trade at the start of the year was particularly tough, so the rise in insolvencies in January was expected, but perhaps not as bad as feared.
“While some operators managed to weather the storm at the end of last year to maximise trade during the festive period, January’s figures suggest the resilience of these businesses could be starting to slip.
“With more headwinds to come from April in the form of tax rises, combined with new regulatory requirements, pressures on the leisure and hospitality industry are only set to increase. It’s crucial that businesses closely monitor their cashflow during this period of uncertainty.”
This comes as data from CGA by NIQ recently revealed business confidence within the hospitality sector had hit a two-year low.
Government support
Moseley added many operators would be looking to the Government for some form of support in the Spring Statement next week.
He continued: “This may be temporary support to bridge the gap between April and the consumer-led recovery that is expected to come later this year.
“Those that manage to hold on during this challenging time will be best placed to recover lost ground and reap the benefits of a more favourable trading environment.”
Analysis of the previous Government figures showed insolvencies were down 7% year-on-year, from 3,737 in December 2023 to 3,464 in December 2024.
