The largest operator of nightclubs in the UK is heading into administration in a bid to restructure the business and deal with various financial challenges. The move at Rekom UK may result in some of its venues closing.
Chair of the company Peter Marks said that administrators are being appointed in order to provide “breathing space and protection” while it negotiates with moneylenders, landlords and other stakeholders. He added: "We must go through this restructure to be able to come out stronger for the future. For any venues that may not continue as part of Rekom UK, we will do our best to find new owners and save jobs".
Rekom UK used to operate as the Deltic Group and before that the Luminar Group. It last fell into administration in 2020 amid the COVID shutdown of the clubbing sector, which is when it was acquired by Nordic nightlife company Rekom. It currently runs more than 45 clubs and late night bars across the UK, including the club brands Atik and Pryzm.
It is no secret that clubs and venues have faced many challenges since the COVID shutdown. Last year Rekom UK cited higher energy bills and poor midweek trading - in no small part because of the cost of living crisis impacting on students - as particular challenges. It will also be affected by the increase in the UK minimum wage in April.
Marks added that “we still have a core of successful club and bar businesses and our Nordic brands, Heidi’s Bier Bar in Birmingham and Cardiff and Proud Mary in Cardiff and Swansea, have outperformed all expectations". However, the various ongoing challenges mean the firm's management have had to accept "that the group cannot continue in its current structure”.
Commenting on these developments, Michael Kill, CEO of the UK’s Night Time Industries Association, told CMU: "The NTIA is deeply concerned about the potential placement of some businesses within the Rekom Group into administration, adding to the constant stream of closures our industry faces on a daily basis. The nightlife sector is in crisis, and we implore the Chancellor and Prime Minister to recognise the urgent need for support before it's too late".
"The continued lack of acknowledgement from the government regarding the severity of the crisis at hand is disheartening", he goes on. "Nightlife businesses, which contribute significantly to the cultural and economic fabric of our communities, are struggling to survive. The time for action is now".
"We call upon the Chancellor to provide targeted support to our industry, acknowledging its unique challenges and the devastating impact of ongoing closures. One crucial avenue for immediate relief is the reduction of VAT. Lowering VAT is a pragmatic and effective measure that can provide much-needed financial respite to struggling businesses, allowing them to weather the storm and continue contributing to our vibrant cultural landscape".
"The nightlife sector is not only a source of entertainment but also a vital economic driver, supporting countless jobs and businesses", he concludes. "As the industry teeters on the brink, we call on the government to acknowledge the gravity of the situation and implement measures that will ensure its survival".
The developments at Rekom's UK business do not affect the company's operations in Denmark, Norway and Finland.