Hospitality sector most at risk of insolvency in 2023

Consecutive rate hikes and inflationary pressure is heavily impacting Australia’s food and beverage industry.

Data released by CreditorWatch forecasts the sector will be at the greatest risk of default over the next 12 months, with the bite on household budgets having a material impact.

The probability of default for the industry was 7.2 per cent in November. The arts and recreation services industry was the next at risk (4.6 per cent) followed by transport, postal and warehousing (4.5 per cent).

CreditorWatch reported the national default rate was unchanged at 5.7 per cent from October to November, however the figure is expected to rise early in 2023.

CreditorWatch chief executive Peter Coghlan says there will be more pain to come next year for hospitality businesses.

“We feel there is certainly going to be an insolvency number at pre-pandemic numbers, possibly even above that... (during) the first six months of the year,” Coghlan said.

He predicted insolvency figures for the hospitality industry to be between 10 per cent and 20 per cent above pre-COVID averages.

“The key for that industry is making as much money as possible through November and December.

“Part of us are watching to see the spend numbers and if they’re at pre-COVID levels then that’s really positive because it helps them get through often what is a quiet January.”

Jonathan Jackson - 15-12-22