Cash remains the priority for businesses this spring, especially if the sector’s restart is delayed, say industry financial experts.
Leading industry accountant Chris Photi, head of travel and leisure at White Hart Associates, told a Travel Weekly Future of Travel forum: “Cash is almost the only consideration over the next month or two.”
He argued: “The industry has been unbelievably resilient. I certainly expected more failures than we’ve had, although there are some in the pipeline.”
But he insisted: “The immediate priority is still cash. Thereafter, it’s going to be about what your balance sheet looks like.”
Photi warned: “The industry needs a summer season. It can’t go through another year with no season. Are we going to get a summer holiday season – from the end of July through to the beginning of September? The industry needs that, [but] there is a question mark over it at the moment.”
Adam Pennyfather, head of financial consulting at the Travel Trade Consultancy, agreed saying: “The priorities are liquidity and cash management for the next few months.
“There are certain hurdles. If you took a Coronavirus Business Interruption Loan Scheme (CBILS) loan out early you have repayments kicking in. You have VAT deferral repayments kicking in. Furlough has been extended, which is a help, but that will be taken away in future.
These financial hurdles need to be managed and could pose a problem if we don’t get clarity and bookings don’t start to come in.”
Repaying the debt businesses have taken on should not pose an immediate problem. Pennyfather said: “It depends what debt you’ve taken on, but the ability to extend bounce-back loans is useful and CBILS have a five-year term.”
However, he said refinancing the loans “would be difficult”, arguing: “Refinancing with something more commercial would be a challenge and then you’re subject to different assessment by lenders. That is the biggest challenge.”
Photi argued: “There is still apotential opportunity for governmentsupported lending. A lot of people had the scope to take out more [money]. I would have erred on the side of taking out as much as possible.”