Hospitality credit demand has fallen more than any other sector in Q1 2025 indicating lower consumer spending, according to Equifax.
Credit demand dropped 16.9 per cent in hospitality, and insolvencies rose 32 per cent in Q1 2025.
“This industry relies heavily on discretionary income, and with 56 per cent of Aussies cooking at home more often, it’s no surprise that businesses are cutting costs instead of investing,” says Equifax General Manager of Commercial and Property Services Scott Mason.
Mason points out that hospitality had the largest reduction in commercial credit demand when compared to other industries, and larger hospitality businesses dropped their demand for credit more than small and medium enterprises (SMEs).
“This drop in demand was evident among businesses of all sizes, but larger businesses reduced far more dramatically – down 26 per cent year-on-year compared to only a 10 per cent drop in demand among SMEs,” says Mason.
“In these industries bigger businesses are more likely to be carrying larger overheads and have less agility or adaptability compared to SMEs, so will be looking for ways to reduce their spending as they weather the difficult economic conditions. On the other hand, SMEs appear to be reaching for credit to fund their ongoing business operations,” adds Mason.
Pressure is being felt across industries in both larger businesses and SMEs – the result of long-term high interest rates and increased market unpredictability, according to Equifax.
The most recent Equifax Australian Scorecard data shows 56 per cent of Australian consumers report cooking at home to save money more often than 12 months ago.
“This is the sector that relies most heavily on consumers’ disposable income, which has significantly eroded,” points out Mason. “The reduced demand in credit within the hospitality sector suggests that these businesses are focusing on efficiency gains through cost cutting, rather than taking on credit to fund investment and expansion.”
Equifax is a global company providing data, analytics, and technology solutions to a variety of sectors. This information is taken from the Equifax Quarterly Commercial Insights: March 2025 report.
Photo by Rachel Claire.
Laura Box
