Tourism is estimated to contribute £106 billion to the British economy each and every year, supporting 2.6 million jobs in the process. While this is a hugely important industry, that is not to say it does not have significant challenges.
While the pound’s poor performance over the last few years has made the UK a great value destination for overseas travellers, the uncertainty posed by Brexit – particularly in regards to visas – has the potential to demand dampen demand and subdue visitor levels.
The Covid-19 pandemic brought yet more challenges, and ground the industry almost to a complete halt. While barely any sector escaped the fallout of the pandemic unscathed, travel and tourism is an industry which could be said to have taken the brunt of the pain. Travel was all but ruled out except for essential reasons, with hotel stays - even within the UK – only possible in exceptional circumstances.
Faced with the challenge of not being able to confidently take future bookings, while also having to pay out refunds for holidays, trips, and flights which have already been booked, cash flow ran dry for many during this time.
This is a problem which went beyond airlines and travel agents; coach tour operators, hotels, accommodation providers, and excursion companies have all been affected as demand for services shrinks to unprecedently low levels.
While the government provided a series of grants, loans, and tax deferral schemes to help business during the pandemic, there was no targeted help for the aviation and travel industries despite the serious challenges they were facing. Even when travel seemed a possibility once more, the adding and removing of travel restrictions at short notice, left many aspiring holidaymakers biding their time until the outlook is more certain.
The widespread uncertainty engulfing the travel industry is piling yet more pressure on an already struggling sector, however, there are still reasons to be positive.
Pent up demand should help the industry bounce back over the coming years, however, as customer demand returns, travel companies need to ensure they are in a position to take advantage of the opportunities this presents. This means ensuring both finances and operations are functioning at optimal levels. Any debt held by the company needs to be affordable and sustainable, while staffing needs to be at an adequate level to provide the service holidaymakers expect.
At Begbies Traynor Group we have travel industry specialists who understand the sector and the unique challenges being faced. By adopting this sector-specific approach, we can provide you with the tailored advice you or your clients need, along with a bespoke plan of action designed to maximise the financial position of the company.
There are a variety of business turnaround and restructuring solutions designed to help those within the travel and tourism industry improve their efficiency, lower distress levels, and be in a prime position to seize new opportunities. Depending on the current financial state of the business, as well as the future aspirations for the company, we can work alongside you or your clients to explore a range of options ensuring the next step for the business can be taken in confidence.
Valuations by our specialist property consultancy experts can help provide clarity when it comes to exploring the possibility of acquiring a property in order to bolster operations and the accelerate growth of the business. Experts are on hand to help highlight potential properties in prime locations which meet your brief and future plans for the business. Conversely, if you are looking at selling an existing property owned by the business, Eddisons can be on hand to help you realise the true value of this while quickly identifying a proceedable buyer with the ability to complete within your optimal timescale.
If the business is still dealing with the financial fallout of Brexit or Covid-19, our business turnaround experts can advise on ways to improve cash flow and deal with outstanding monies owed. This may involve entering into negotiations with creditors – including HMRC – in order to restructure your liabilities. This can immediate free up cash flow, while providing long-term certainty to both your company and also to your creditors when it comes to repaying the borrowing. This can be achieved using a formal insolvency process known as a Company Voluntary Arrangement (CVA) which, once approved by creditors, becomes legally-binding on all sides.
If the company is weighed down by a complex operating structure, a process of business simplification can improve efficiency and reduce costs. Non-performing areas of the business can be identified, allowing valuable resources, money, and energy, to be diverting to the parts of the company which generate the majority of the income. Underperforming arms of the business can then be either scaled back or closed completely depending on your long-term objectives for the company.
Alternatively, administration helps to maximise creditor returns without increasing liabilities. This means that even if the company cannot be ultimately saved, outstanding creditors will typically receive more if the company enters into administration first, rather than going straight into liquidation.
Regardless of the current performance of the travel, tourism, or accommodation business in question, rest assured that there is a solution out there which can help, and by seeking industry-specialist advice, we can put you or your clients on the right road to recovery.