Thu, Feb 18, 2021

Hospitality and Leisure Sectors Face Continued Uncertainty

Business owners across the hospitality and leisure sectors throughout the UK are set to be disappointed when the Government announces the long awaited roadmap to ease UK lockdown restrictions.

With the current restrictions on the sector set to continue and the assumptions supporting the latest iteration of many business plans tied to the end of March, further revision of the plan are almost certainly required.

The uncertain future will only be compounded when the Government lifts the temporary suspension of creditor enforcement action at the end of March 2021, this returns the ability of creditors to issue Statutory Demands and Winding Up Petitions for unpaid liabilities, placing further pressures on the business plan.

Now is the time for businesses to reassess and revisit their financial plans to ensure a viable level of liquidity is maintained.

Duff & Phelps has highlighted four core areas businesses throughout the hospitality sector need to take action on now to ensure longer term viability:

Understand Your Cash Position and Talk to Lenders

Work with your accountant or financial director to get on top of your current financial position after all you cannot change that position until you know what it is. Work with experts to identify what is owed and with who and do not forget to analyse the historic performance of the business to illustrate its underlying strength.

Get Ahead of HMRC

Work with experts such as Duff & Phelps when negotiating with HMRC on Time-To-Pay. There are numerous tax deferral schemes now in place from VAT to Corporation Tax and while you may have negotiated a repayment schedule back in 2020, now is the time to reopen those discussions.

Communicate With Your Creditors

Given many in the hospitality sector are simply unable to trade, it makes sense that suppliers to that industry are also impacted.  Business owners throughout the supply chain should explore conversations about debts together and hand in hand with financial advisors as a means of navigating cashflow.

Engage With Landlords Immediately

Since the outbreak of the coronavirus pandemic, the government has made a number of measures available for commercial tenants to assist them such as the temporary abolition of business rates, the deferment of VAT payment and help with employees’ wages. One thing which is not affected however is a tenant’s obligation to pay its rent and, despite the number of helpful measures granted by the government, which are in place until March 2021, tenants may still not be able to meet their rental obligations. Businesses therefore need to actively engage with landlords to agree a rent concession ahead of this date.

Duff & Phelps has a trained team of experts to support both independents and hotel chains through potential franchise negotiations. Duff & Phelps can also help businesses establish best practices across the entire value chain, including assistance with a range of transformational human resources initiatives, accessing emergency funding, maximizing cash flow management, Time To Pay arrangements in the context of HMRC tax commitments and proactively ensuring all suppliers and creditors are properly managed.

Please read here for an overview of our services.

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