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​Hospitality Sector Closure Rate Declines in Early 2024

​Hospitality Sector Closure Rate Declines in Early 2024

Posted by Emily on 22nd May 2024

The hospitality sector in Britain has shown remarkable resilience in the face of adversity. The rate at which venues are closing has significantly decreased in the first quarter of 2024. Data from the latest Hospitality Market Monitor, conducted by CGA NIQ and AlixPartners, reveals a reduction from an average of eight closures per day in 2023 to just four per day in the current year. This represents a modest 0.4% quarter-on-quarter decrease in total venues, marking one of the smallest drops since the onset of the Covid-19 pandemic.

As of March 2024, the total number of hospitality venues, including pubs, bars, restaurants, hotels, and other licensed premises, is 98,745. This reflects a 2.5% decline compared to the previous year, equivalent to one in every 40 venues closing over the last twelve months.

Karl Chessell, a director at CGA by NIQ, expressed a measured optimism: "After a very challenging few years, these numbers give grounds for tentative optimism that hospitality closures will slow as 2024 progresses. While thousands of businesses remain fragile, a downward trend in inflation should hopefully raise the confidence of operators, consumers, and investors alike and protect more venues from closing their doors."

The report also brings encouraging news for the sector, highlighting a slight resurgence in the casual dining and independent restaurant sectors. Despite a combined net decline of 21.0% from March 2020 to December 2023, these sectors achieved a 0.5% growth in the first quarter of 2024. Kate Nicholls, chief executive of UKHospitality, noted, "This slight growth in both casual dining and independent restaurants indicates a potential growth in an appetite for investment in the sector. These are positive signals, albeit at a time when the sector continues to face tough economic challenges."

The number of food-led sites increased by 0.1% in the first quarter of 2024, while drink-led and accommodation businesses saw declines of 0.7% and 0.4%, respectively. The independent restaurant segment, however, remains vulnerable, experiencing a 22% decline between March 2020 and December 2023. Managed multi-site hospitality groups showed resilience, with numbers virtually unchanged from December 2023.

Graeme Smith, AlixPartners' managing director and head of leisure and corporate finance, commented on the broader market conditions: "Many different and significant factors have impacted the economy and the hospitality sector in the past three years, whether that be the disruption from rapid inflation or the longer-than-anticipated recovery period from the pandemic. The stabilizing factors are beginning to translate into fewer closures and more M&A deal activity, indicating a cautiously optimistic future for the sector."

We welcome your thoughts and comments on the evolving hospitality landscape below.