And according to audit, tax and consultancy expert RSM UK, hospitality businesses can expect further upheaval as war, increasing costs and restricted consumer spending are set to continue.
Smaller hospitality businesses were facing the brunt of insolvencies before the Middle East conflict began while larger operators have economies of scale to fall back on, RSM UK said.
Yet, while company insolvency statistics rose from 222 in January 2026 to 270 in February 2026, this was flat compared to the same month in 2025 (272).
Back on the rise
RSM UK partner and head of leisure and hospitality Saxon Moseley said: “Hospitality insolvencies are back on the rise, which is unsurprising given the burdensome tax regime faced by operators combined with subdued consumer demand, making it increasingly challenging to stay afloat.
“While bigger operators tend to be better insulated due to having stronger balance sheets and economies of scale to fall back on, it’s the smaller, independent businesses that are struggling the most.
“Unfortunately, the outlook for the sector isn’t much rosier. The jump in insolvencies came even before the Middle East conflict, which if it continues, could hit consumer sentiment and discretionary incomes, combined with an expected rise in inflation and energy costs, resulting in a double whammy for the hospitality industry.
“Operators are already having to contend with the Employment Rights Act, and rise in national minimum wage and business rates, meaning some have, and others will, decide it’s no longer viable to keep their doors open.”
Restructuring options
Meanwhile, RSM UK restructuring partner Gordon Thomson added: “Relatively weak sales in the hospitality industry along with relentless cost pressures have required some operators to explore restructuring options to optimise their trading position and to reduce their cost base.
“It’s encouraging to see businesses taking action rather than burying their heads in the sand but this highlights just how challenging it is to operate in the current environment.
“As pressures in the sector intensify in the coming months, we expect to see more operators having to consider restructuring options in order to survive.”
