Business owners across the hospitality and leisure sectors throughout the UK need to take stock and prepare themselves for yet another turbulent year as the onerous restrictions imposed by the third national lockdown show no signs of being eased. Critical to this is to revisit the underlying assumptions that underpin their existing financial plans and ensure key stakeholders continue their support.
UK chancellor Rishi Sunak MP announced a raft of further financial support measures for the sector, including £9,000 grants to businesses in a package worth some £4.3 billion. This was expected to support businesses in the period up to spring; however, with no sign of any good news for the sector in the short term, these measures are unlikely to be sufficient to secure the future viability of many businesses in the sector.
Hospitality businesses have faced the most challenging time imaginable over the past year. For many, 2020 will have been the year that they spent time and energy on negotiating repayment plans with the likes of landlords, lenders and HMRC, only to find that after an all-too-brief window of opportunity to trade, the door has been slammed in their faces once more.
As another national lockdown continues, businesses need to revisit their financial plans and, amongst other things, review what agreements they had already negotiated with creditors. This is to ensure they keep a viable level of liquidity; otherwise, they could face repayments on existing debt with little or no income. In addition, while support is in place up to April, Q2 could be critical for many as government support dries up. Now is the time to get the house in order.
There are four core areas businesses throughout the hospitality sector need to take action on now to ensure longer-term viability:
Business needs certainty, and with the potential for the restrictions on creditor enforcement action being lifted at the end of March, we would urge anyone in the sector to contact us to help them navigate the path of renegotiation with lenders, landlords, HMRC and trade creditors at this critical time.
Duff & Phelps has a trained team of experts to support both independents and hotel chains through potential franchise negotiations. We can help businesses establish best practices across the entire value chain, including assistance with a range of transformational human resources initiatives, accessing emergency funding, maximising cash flow management, Time-To-Pay arrangements in the context of HMRC tax commitments and proactively ensuring all suppliers and creditors are properly managed.
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