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Hotel insolvencies have increased by 19% in the last year, from 127 hotel companies in 2022/23 to 151 in 2023/24, as operation costs have continued to rise, UHY Hacker Young has revealed.
Meanwhile, room occupancy among hotels with less than 25 rooms has continued to fall from 69% in February 2023 to 64% in February 2024.
Hotels are also affected by the number of international tourists travelling to the UK, which has still not reached pre-pandemic levels as of Q3 2023 at 10.9m. This is 8% less than Q3 2019.
As a result, hotel businesses have amassed significant levels of debt to weather the lack of tourism during the lockdown period.
According to the accountancy firms, the higher costs have been driven in part by the same challenges facing all sectors, including higher interest rates and inflation.
More specific for the hospitality sector, the firm has said that spiralling costs have driven the price of importing food and drink, which is hard to pass on to customers due to the competitive nature of the industry.
In addition, staff costs have also continued to rise both from the National Living Wage – which increased by 9.8% this year – and from a post-Brexit slump in staff coming from Europe.
Businesses in the hospitality sector have also faced the highest rate of wage inflation out of all UK sectors, with workers’ pay having increased by 53% over the last decade.
Brian Johnson, partner at UHY Hacker Young, said: “The hotel industry continues to go 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.”
