HOTEL & RESTAURANT INSOLVENCY SUPPORT

Any period of economic downturn can have a significant impact on businesses in the hospitality industry. During periods of significant economic recession or financial instability, consumers tend to consolidate their position and cut back on unnecessary spending — usually including eating out and staying in hotels. This decrease in revenue makes it difficult for hotels and restaurants to cover operational costs, ultimately leading to hotel and restaurant liquidation and closures. 

Operational costs, such as utilities, rent, supplies, and wages, are always increasing over time. For many hospitality firms, these rising costs often outpace increases to revenue over the same period. This puts a significant squeeze on company profit margins, making it particularly difficult for businesses (especially small or newer firms) to absorb these cost hikes. This can lead to periods of financial instability and may, ultimately, result in hotel and restaurant insolvencies. 

Additionally, any fluctuations in the costs of necessary materials and food can make the regular process of monthly budgeting that bit more unpredictable and complex. 

The hospitality industry can often face significant labour shortages, particularly in more skilled positions. Any difficulty in recruitment can lead to increased labour costs and operational inefficiencies. Left unresolved, these shortages can also impact the quality of your service, which in turn will lead to dissatisfied customers and negative reviews — impacting your firm’s reputation, reducing money coming in, and further exacerbating financial issues. 

Additionally, businesses such as hotels and restaurants also often find themselves on the other side of this issue of labour retention. Staff turnover in hospitality is one of the highest around, and when long-tenured members of the team leave, a business can suffer. This is also true when you tend to rely on rapid turnover of inexperienced staff such as students as, when term time ends, they may all leave you struggling to find adequate cover for shifts — likely having a knock-on effect and potentially leading to hotel and restaurant insolvencies.

Businesses such as hotels and restaurants are obligated to comply with a myriad of rules and regulations including health and safety standards, labour laws, licensing requirements for food, alcohol, music, etc., and much more. The process of navigating these regulatory landscapes can be time-consuming and potentially costly. Failure to comply can result in severe punishments, including fines, legal problems, or even forced winding up. 

Additionally, these regulations are not set in stone and are always subject to change. Alterations to regulations, such as laws that increase staff wages and the introduction of stricter health and safety codes can only impose an additional financial burden upon firms who may be already struggling against financial issues.