The hospitality and leisure sector continues to face a complex and fast-shifting landscape. To better understand the pressures faced by operators, suppliers and credit professionals, Menzies and the Chartered Institute of Credit Management hosted a joint roundtable at Menzies’ London office. The session brought together industry specialists, members of the Menzies Creditor Services team, and their head of the hospitality and leisure sector. The morning focused on how the sector is evolving, viewed from both an insolvency perspective and through the lens of recent success stories, as well as the practical steps businesses can take to remain resilient in today’s challenging economic climate.
Throughout the discussion, a nuanced picture emerged. Rising costs, fluctuating demand and fragile confidence remain key concerns, yet the industry’s ability to adapt continues to stand out. For credit managers, the insights shared offered a valuable window into current trading realities and the risks and opportunities that lie ahead.
Much of the prevailing uncertainty is driven from the wider economic narrative. Several participants noted frustration with recent government messaging, which they felt had unnecessarily dampened confidence. While Christmas bookings have generally held up, discretionary leisure spending has weakened and booking windows have shortened, creating additional cash flow pressures for operators, particularly regional hotels.
Suppliers also highlighted their own set of challenges. Rising labour costs, workforce shortages linked to Brexit, and increasing National Insurance and national living wage obligations continue to squeeze margins. Premium hotels are seeing a decline in high-spending non-dom customers, while mid-market brands face the impact of families trading down or choosing lower-cost dining. As one participant noted, headline statistics can be misleading: and “the statistics can be skewed. Traditional hospitality is not booming.”
Credit managers pointed to a growing divide between resilient national groups and more vulnerable independents. In response, many suppliers have tightened credit terms, increased reliance on credit insurance, or reduced exposure to businesses perceived as higher risk. Others questioned whether credit insurance alone is sufficient, emphasising the importance of direct assessment and long-standing customer knowledge. Fraud also emerged as a recurring concern, with cases involving falsified accounts, intercepted payments and unusual order patterns becoming increasingly common.
Inevitably, the conversation turned towards insolvency. Accommodation and food services now represent around 14 percent of United Kingdom insolvencies, with the potential for this to rise once businesses feel compelled to make long-delayed decisions. According to Giuseppe Parla, Director in the Menzies Restructuring and Insolvency team, the current numbers may not reflect the reality beneath the surface.
“There are not as many insolvencies happening as you would expect because many directors are simply waiting for the Budget. HMRC engagement has improved when businesses approach them early, but internally they are stretched, and cases move slowly as a result.”
Continuing to stress that early action remains critical. By the time a business enters formal insolvency, the range of available options are more limited, making early dialogue crucial for better outcomes for creditors and operators alike.
People and skills formed another strong thread of the discussion. Hospitality has long been a labour-intensive industry but changing expectations have created new pressures. Younger workers increasingly seek hybrid arrangements that simply are not possible in customer-facing roles, while over-fifty-fives are returning to employment in different patterns. Roles once assumed to require minimal training now demand structured onboarding, yet persistently turnover continues to place strain on finance, HR and operational teams.
Culture and first impressions have taken on greater importance in recruitment. Even small interactions during the hiring process can sway candidates, who are increasingly selective. “It is the human skill to interact. That is becoming the real priority.” Participants emphasised the need for clearer career pathways and leadership to help younger employees understand the long-term opportunities within hospitality.
Despite the challenges, the roundtable ended on an optimistic note. Experience-led leisure concepts continue to gain momentum, low and no-alcohol products are expanding rapidly, and gyms and wellness facilities are enjoying strong demand. Investors are still willing to back innovative concepts, and banks are prepared to support businesses that demonstrate resilience and sound planning. Several attendees also pointed to a renewed sense of purpose within the industry following the pandemic, which underscored the value of shared experiences and community spaces.
Final thoughts
For credit managers, the key takeaway is one of balance. The sector faces significant structural pressures: rising costs, labour shortages, ongoing debt burdens and a clear divide between stronger and weaker operators. Yet innovation, consumer appetite and the adaptability of businesses across the industry continue to provide reasons for confidence.
Appreciating these nuances will continue to be vital as the sector navigates the next phase of economic uncertainty. By exercising informed judgement and maintaining close relationships with customers, credit professionals can play a central role in supporting viable businesses and contributing to a sector that remains an important part of the United Kingdom’s social and economic fabric.
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