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Suitcase in a hotel room | AccountingWEB | Hotel insolvencies rise as rough patch continues
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Hotel insolvencies rise as rough patch continues

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Against a backdrop of rising costs, businesses cutting back on conferences, and a lack of international tourists, hotel insolvencies are on the rise.

17th Apr 2024
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Hotel insolvencies are on the rise, according to UHY Hacker Young, with the industry continuing to come up against a whole host of challenges.

Data released by the national accountancy group shows that insolvencies have increased by 19% in the past year, from 127 hotel companies in 2022/23 to 151 in 2023/24.

Several factors are contributing to the rise, including an increase in costs – driven in part by higher interest rates and inflation – as well as the price of importing food and drink.

Post-Brexist slump

UHY also noted that workforce costs have continued to rise both from the national living wage and a “post-Brexit slump” in staff coming from Europe, with businesses in the hospitality sector having also faced the “highest rate of wage inflation out of all UK sectors” – 53% over the past decade.

One area where hotels have been hit is businesses cutting back on conferences and away days, with these corporate events being key revenue sources across venue hire, rooms, food and drink.

Elsewhere, hotels are also continuing to be affected by the number of international tourists to the UK, which has still not reached pre-pandemic levels as of Q3 2023 at 10.9m – 8% less than Q3 2019.

Very rough patch

Brian Johnson, partner at UHY Hacker Young, has stressed that the industry is going through a “very rough patch”.

“The hotel industry would like to see much more help from the government in areas like visa rules, the return of tax-free shopping for tourists and more capacity at our airports,” he added. “Now that Covid is over, the UK has to compete hard with a lot of countries that are really determined to win more tourism spending.”

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