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Huge Number of UK Hospitality Firms Facing Possible Liquidation, Trade Body Warns

By Jon Munnery
27 February 2023

As many as a third of all hospitality businesses in the UK are at risk of going under in the coming months, according to the industry’s main trade body.

UKHospitality has said that cost increases, labour shortages and issues with Covid-era debts are all piling financial pressure onto bars, pubs and restaurants across the country.

For many company directors operating in the sector, the financial options are narrowing and voluntary liquidation is emerging as an increasingly viable route forward.

Having polled its members recently, UKHospitality has revealed that as many as 32 per cent of hospitality business bosses would describe their operations as being at risk of failure within the next 12 months.

According to the trade body, there remains plenty of demand among consumers for hospitality services but businesses in the sector are effectively drowning financially due to “price rise after price rise”.

Kate Nicholls, UKHospitality’s chief executive, has called for the British government to take urgent action in the coming weeks to support struggling hospitality operators.

“Without action, we can see just how stark the year ahead could be with a third of businesses at risk of failure,” she said.

“Venues are simply unable to pass prices onto the consumer at the same rate they are experiencing their own costs rise.

“If the chancellor wants to stem the bleeding in hospitality and stop those price rises, which unfortunately contribute to inflation, he can take action in the Budget.”

Sectors across the British economy have been facing an array of challenging operational headwinds in recent quarters, in no small part as a result of inflation levels that reached heights not seen for several decades.

Those pressures contributed significantly to a huge rise in the number of corporate insolvency and voluntary liquidation cases recorded over the course of 2022 in England and Wales.

Any company director who sees warning signs that their business might be heading for insolvency in the near or medium-term future is advised to seek out expert help to better understand their liquidation options sooner rather than later.

Jonathan Munnery
Insolvency & Restructuring Expert
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