Hospitality insolvencies hit 3,353 in 2025
The latest insolvency data suggests that hospitality remains in a precarious state. Accommodation and food service activities saw 3,353 closures in the 12 months to December 2025, representing 14% of cases, according to UK Government figures.
As per the same government data, the figure points to persistent high risk for a sector that has endured years of disruption and cost escalation. The government figures also place accommodation and food service activities as the third highest sector for insolvencies across all UK industries in 2025, behind construction and retail or wholesale.
A small quarterly improvement offers limited comfort
Insolvencies in the sector improved by 2.4% in Q4 compared to Q3 2025, according to government figures. The decline is welcome, but the overall number remains elevated. As per the same data, the pressures driving insolvency remain familiar. Operators continue to struggle with high debt, rising wage costs and limited ability to pass cost increases on to consumers.
Policy decisions loom over licensed venues
As previously reported by the drinks business, licensed venues are entering 2026 facing a convergence of cost pressures, including wage increases, business rates revaluation and alcohol duty changes.
A House of Lords debate on 22 January 2026 considered the impact of government policy on the retail and hospitality sector. The timing was particularly pointed for pubs, bars and restaurants because several cost changes are due to take effect in spring, while alcohol duty was uprated with the retail price index from the start of this month.
Business rates uncertainty grows ahead of April 2026
Business rates remain a central concern for hospitality operators. Business rates relief for retail, hospitality and leisure businesses is currently set at 40% for 2025 to 26, capped at £110,000, according to the government briefing. The next business rates revaluation is due in April 2026 and will be based on 2024 property values.
Meanwhile, the Treasury’s November 2025 budget set out plans to reduce the multiplier for every business and apply deeper reductions for retail, hospitality and leisure properties. The changes are expected to be worth nearly £900 million per year and benefit more than 750,000 retail, hospitality and leisure properties, funded by higher rates on the top 1% of the most valuable properties.
The same Treasury material suggests large distribution warehouses will pay around £100 million in 2026 to 27.
Targeted pub relief draws questions from advisers
The focus on pub-specific measures has attracted criticism from some in the advisory sector.
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Speaking to the drinks business, Marvin Rust, md and EMEA tax practice leader at Alvarez & Marsal, said: “Targeted support for pubs is understandable, but the tax logic doesn’t stop there. Hotels, restaurants and cafés exposed to the same revaluation shock, the same withdrawal of Covid-era reliefs, and the same structural flaws in the business rates system.”
He added: “With the distinction between pubs and restaurants increasingly blurred, particularly as many operate as gastro-led venues, relief needs to reflect the reality of the wider hospitality and leisure ecosystem, not just one part of it. If rates are meant to tax property rather than punish trading performance, it’s hard to justify relief for one part of hospitality while leaving the rest to absorb material increases overnight.”
Staffing pressures continue to shape decisions
Hospitality supported 2.6 million jobs in September 2025, around 7% of all jobs, according to the same briefing. It also recorded 2.1 million payrolled employees in November 2025, down by around 59,000 compared with November 2024.
Vacancy rates remain high. Between September and November 2025, there were 77,000 vacancies in accommodation and food services, equating to three vacancies per 100 workers, compared with 2.3 across all industries.
Pay remains a further point of tension. The same briefing puts median hourly pay for full-time hospitality workers in April 2025 at £14.04 excluding overtime, compared with £19.67 for all full-time UK workers.
Reduced opening hours become a survival tactic
Many operators have already adjusted trading patterns in response to labour shortages and rising overheads.
As reported by the drinks business on 14 January 2026, a British Beer and Pub Association survey found that 47% of pub owners reduced their opening hours on trading days between April and October last year.
The same report found one in seven pub owners were closed entirely on some days and almost two-thirds had cut staff hours.
According to figures from the British Beer and Pub Association cited by the drinks business, the UK had 60,800 pubs in 2000, falling to 55,400 in 2010, 46,850 in 2020 and 45,000 in 2024.
With insolvencies still running at historically uncomfortable levels and further fiscal change approaching, the coming months may prove decisive for operators across the licensed trade, particularly those without the cash reserves to absorb another spring of rising costs.
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