Travel and Tourism Sector Hit Hard as Financial Distress Surges Across UK
The travel and tourism industry is feeling the sting of the UK’s worsening financial landscape, with new figures revealing a sharp rise in firms teetering on the edge of collapse.
According to the latest Red Flag Alert issued by insolvency experts Begbies Traynor, financial distress in the sector has soared by a staggering 39% compared to last year. And it’s not just isolated to travel and tourism. The entire consumer-facing economy is wobbling.
“Financial distress has intensified over the past twelve months in every corner of the economy,” said Julie Palmer, Partner at Begbies Traynor.
“This means businesses across the UK are facing significant headwinds and many will have to review where they can tighten their budgets or restructure to give themselves more stability in the immediate future.
This time last year, there was a degree of optimism amongst business leaders who were hoping to see a shift in fortunes in the second half of the year, but fast-forward 12 months and confidence is in short supply.
Households are still grappling with their finances, and this is keeping consumer confidence volatile. The knock-on effect of this is clear to see in the consumer-facing sectors where margins are thin, growth is hard to come by, and the impact of higher employee costs is pushing many businesses to the brink of collapse.”
It’s a worrying snapshot. Across all industries, nearly 50,000 companies in the UK are now battling “critical” levels of financial distress. That’s a 21.4% spike year-on-year, as of the end of Q2 2025.
But the spotlight is firmly on tourism and hospitality. Rising taxes, shaky consumer spending, and global economic turbulence are battering businesses that depend on disposable income. Bars and restaurants haven’t been spared either, seeing a distress rise of 41.7%, while general retail follows closely behind at 17.8%.
Industry insiders warn this could only be the beginning.
Demand might be there, but spending power isn’t. Brits are cutting back. Holidays are being postponed. Meals out are a luxury again.
And while some business owners had pinned hopes on a rebound in the second half of the year, that optimism is rapidly evaporating.
For the UK’s travel and tourism sector, the storm isn’t passing just yet.
