UK- The latest data from the Office of National Statistics (ONS) has revealed that the number of businesses in the UK’s hospitality industry entering insolvency increased by 20% in the year ending May 2024 as players struggle with inflation and unsupportive government policies.
According to ONS, 3,752 food and accommodation businesses shut down in the year ending May 2024, a 20% increase from the 3,133 businesses recorded in the previous year, compared to the average insolvency rate of 7% for other service industries. This represents the third highest proportion of insolvencies of any industry in the UK.
These statistics reflect the ongoing challenges facing the hospitality industry in the UK owing to high inflation.
According to the CGA Prestige Foodservice Price Index for Q1 2024, hospitality food inflation was more than double the food inflation experienced in the retail sector. High inflation caused a corresponding increase in the cost of food supplies, which was passed on to customers.
The hospitality industry has also struggled with high interest rates, making it difficult for players to access financing.
Recent policy announcements, especially regarding wage requirements, have also had mixed implications for the hospitality industry.
Although the King’s most recent speech offered some hope to hospitality players through proposed reforms to apprenticeships, an intricate planning system for new hospitality sites, and laws to enhance safety, anticipated policy changes are expected to further stretch margins.
These anticipated policy changes include further enhancements of employee rights, minimum wage increments, and expected changes to zero-hour contracts. The King’s failure to discuss reforms in VAT and other business reforms is also thought to contribute to potential margin increases.
However, the data also revealed that month-on-month (MoM) insolvencies decreased by 9%.
Although the MoM insolvency decrease may point to a possible recovery, the government must continue to implement positive and proactive policies in the hospitality industry.
Kate Nicholls, UK Hospitality’s CEO, said, “With no mention of business rates in today’s King’s Speech, the autumn fiscal statement is now all the more important to drive the government’s plan for national renewal and to show clear progress on delivering its manifesto commitment to fix the broken business rates system.”
Liked this article? Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World. HERE
