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Insolvency Risk Facing 75% of Hospitality Businesses

By Jon Munnery
13 August 2020

Over three-quarters of the UK’s many thousands of hospitality businesses are facing the prospect of becoming insolvent within the next 12 months.

That’s according to the industry’s main trade organisation UKHospitality, which has been surveying its members to assess how they’re coping with the pressures of operating in the midst of the Covid-19 crisis.

Around 1 in 5 of those polled were found to be at significant risk of entering insolvency or were expecting to go out of business in the coming months.

Most respondents to UKHospitality’s survey said that they considered themselves at some risk of insolvency, while only just less than a quarter were confident enough to say they weren’t in any real danger of being forced out of business.

The trade body has called on the government to take steps to support its industry and the many hundreds of thousands of people whose jobs are currently in jeopardy across the sector.

Estimates suggest that the 75 per cent of hospitality companies who fear becoming insolvent in the next year employ close to 3 million people across the UK.

“The future of this sector, which provides jobs in every region of the country and is central to our social lives, has never looked shakier,” said UKHospitality chief executive Kate Nicholls.

“The support the government has provided has been crucial in ensuring that many businesses have survived the initial shock of lockdown and stimulated a return of some demand,” she said.

“Without further support, however, we are going to see more and more venues going out of business and people continue to lose jobs.”

Policy options that UKHospitality would like to see taken as a means of supporting operators within its sector include business rate holidays, VAT cuts and financial assistance to cover commercial property rents.

Ms Nicholls said that her organisation’s own research shows just how stark the situation currently is for hospitality businesses and emphasised the point that some 20 per cent are already looking at insolvency as a likely outcome.

Without urgent help, “we are going to see businesses fail and jobs lost as the economy begins to reopen,” she warned.

Jonathan Munnery
Partner
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