Insolvencies in the UK hospitality industry increased slightly during the first half of 2024, as businesses in the sector continued to be impacted by high inflation, rising wage costs and the cost-of-living crisis.
According to figures from the latest Buchler Phillips Hospitality Index of insolvencies, 1,801 hospitality businesses fell into insolvency during the six months to June 2024, up from 1,776 during the same period of 2023.
Subsequently, insolvencies increased 13 per cent from May to June, with the index rising from 204.3 to 231.6 in June – although this remains lower than the peak of 273.4 recorded in August 2023.
The Buchler Phillips Hospitality Index (BPHI) of insolvencies has tracked insolvencies of accommodation and food service businesses, including pubs, restaurants and hotels, since January 2014. The BPHI is compiled from monthly insolvency statistics gathered from the UK Government’s Insolvency Service, using a base of January 2014 = 100.0 to track insolvency activity in the sector.
Commenting on the most recent figures, Buchler Phillips Managing Director Jo Milner said: “We’ve come a long way from last year’s tough summer when the hospitality sector was feeling the worst effects of higher energy prices and the cost-of-living crisis, but we’re not out of the woods yet: inflation is struggling to stay down after its fall this year and wage costs remain high.”
The report added that hotel demand across major UK cities had seen a boost from Taylor Swift’s Eras Tour dates in cities including London, Cardiff, Liverpool and Edinburgh in June (Swift played a run of five further shows at London’s Wembley Stadium in August.)
However, Buchler Phillips added that the wet weather the UK experienced over much of the early parts of summer is expected to have impacted the boost that the industry was forecast to experience from sporting events such as Euro 2024 – where the England national football team reached the final.
Looking forward, the report stated that hospitality businesses would be hoping that the new Labour government’s “more development-friendly approach to planning” would provide longer-term help and offset the possibility that minimum wage increases would squeeze margins further.
Buchler Phillips concluded: “For now, hopes are pinned on October’s Autumn Budget to provide some relief on business rates or VAT.”
Find out more about how the cost-of-living crisis and growing sobriety among young people are impacting the UK's pub industry
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