Hospitality Sector Faces Struggles as Insolvencies Climb in January 2025
Posted by Emma on 21st Mar 2025 Reading Time:
The UK hospitality sector faced another setback in January 2025, as the number of insolvencies surged by 21% compared to the previous month. According to the latest figures released on 18 March, the number of businesses entering insolvency rose from 225 in December 2024 to 273 in January 2025.
While this marks a month-on-month increase, the annual comparison paints a slightly more complex picture. Accommodation and food service insolvencies were up by 3% compared to January 2024, rising from 265 to 273. However, looking at the broader trend, the total number of insolvencies over the 12 months to January 2025 actually fell by 7%, dropping from 3,747 to 3,474.
Despite this decline in annual insolvencies, industry experts warn that the challenges facing hospitality businesses are far from over. Saxon Moseley, partner and head of leisure and hospitality at audit and consulting firm RSM UK, acknowledged that while the numbers were concerning, they were not as severe as some had feared.
“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,” he commented. He noted that many operators had managed to push through the difficulties of late 2024 in order to capitalise on the festive trading period. However, the latest figures suggest that their resilience may now be waning.
Looking ahead, Moseley warned that further challenges lie on the horizon. With tax increases and new regulatory requirements set to take effect in April, the financial pressures on hospitality businesses are expected to intensify. He stressed the importance of proactive financial management, urging companies to keep a close eye on cash flow in order to navigate the uncertain months ahead.
The hospitality industry remains a vital pillar of the UK economy, yet the sustained pressure of rising costs, regulatory changes, and economic uncertainty makes survival increasingly difficult for many operators. With further turbulence expected, businesses must remain agile and prepared for what could be a defining year for the sector.