The hospitality sector saw a 142 per cent increase in insolvencies in the first quarter of 2024 compared to the same period last year, according to new figures from Deloitte Ireland.
The professional services company said there had been 46 insolvencies in the sector in the first three months of this year, with 35 of them relating to restaurants and cafes. This compared to 19 hospitality insolvencies in the period January-March 2023, while the figures also represented a 44 per cent increase on the fourth quarter of last year.
Deloitte attributed the jump to increased labour and energy costs as well as insurance costs and a return in the VAT rate to 13.5 per cent from last September. It also noted the mandatory pension scheme that will come into operation in September 2024 and said these factors, together with the impact on discretionary spending as a result of overall increases in the cost of living, would likely lead to “continued distress” in the industry.
The pressures on hospitality were quantified as part of Deloitte’s latest insolvency and restructuring statistics, which indicate that there have been 214 corporate insolvencies across sectors in the first quarter, up 47 per cent year-on-year.
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“These statistics show there is an increased rate of impairment within businesses and as a consequence we are seeing a material uptake in insolvencies,” said James Anderson, turnaround and restructuring partner at Deloitte Ireland.
Mr Anderson said the impact of the higher hospitality insolvency rate on employment levels in the sector would be a critical factor to monitor.
“The fourth quarter of 2023 was the first time, since the end of pandemic, that employment in the food and accommodation sector surpassed pre-Covid levels. The change in the employment levels in the sector will be an important barometer of performance as we progress through 2024.”
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