One in 10 Australian hospitality businesses closed over the past year, according to CreditorWatch’s Business Risk Index.
Around 9.6% of all Australian businesses in the sector closed in the twelve months ended April 2025, the highest of any industry and a new record. While insolvencies have largely plateaued, they remain at high levels, with 1,255 insolvencies reported last month.
“We hear so much about the cost-of-living crisis, but it’s a ‘cost of doing business crisis’ as well, with businesses having seen significant increases in their cost bases,” said CreditorWatch Chief Economist Ivan Colhoun.
Hospitality businesses are also affected by cost-of-living issues, according to Colhoun and CreditorWatch CEO Patrick Coghlan.
“Businesses exposed to discretionary spending experience the worst of both worlds, with their costs pressured and their customers’ demand weakened. Hopefully the recent interest rate cuts by the RBA can build on the beneficial effects of last year’s income tax cuts and cost of living support,” Colhoun said.
South Australia saw the highest rate of hospitality business closures in the past year, at 10.8%. Queensland, Victoria, New South Wales, and the Australian Capital Territory also all saw closure rates between 9 and 10%.
Hospitality and Construction businesses had the highest insolvency rates, representing 40% of all insolvencies. Insolvencies have likely plateaued due to governmental cost of living support and 2024’s income tax cuts, Colhoun said, projecting February’s interest rate cut will positively impact these results later in 2025.
Administration and Support Services reported the second-highest closure rate of any sector, at 6.5%, followed by Arts and Recreation Services at 6.3%.
