Travel and tourism: time for take off
Reflecting on the results of this report, the travel and tourism sector appears to be turning a corner. The outlook is no longer all doom and gloom; 59 per cent of operators are expecting an increase in customer numbers in 2022 against 2019, which was a record year, while a further 32 per cent think their business will return to pre-pandemic levels by the end of 2022. However, despite these positive indicators, there is still a degree of concern regarding potential and latent failures in the sector. Tourism was one of the first industries to be hit by the pandemic and it is likely to be one of the last to emerge from this crisis, so the sector still has a way to go before it bounces back entirely. Not only is there the possibility for further travel disruption if a new coronavirus variant were to emerge, but experience tells us that the biggest danger comes not at the height of the downturn, but during the recovery, when pressure on working capital rises rapidly. Liquidity is even more essential in a highly regulated sector where there are strict financial criteria for all operators. A short-term cashflow forecast is key to managing immediate liquidity and we recommend a 13-week model, which will capture weekly and monthly receipts and payments, plus quarterly payments such as VAT, as well as rent and interest charges. Firms will also need to engage with key stakeholders as early as possible or risk running out of cash. If you don’t have the available cash to cover your potential liabilities, then your business may be denied the ATOL licence it needs to continue selling ATOL covered holidays. FRP can help, so please do get in touch to discuss the options available. There’s every reason to be confident that the travel sector will take off again in 2022.
The outlook is no longer all doom and gloom; 59 per cent of operators are expecting an increase in customer numbers in 2022 against 2019, which was a record year. Simon Stibbons Restructuring Advisory
Simon Stibbons Partner Restructuring Advisory London +44 (0)20 3005 4039 firstname.lastname@example.org
Notes * 1 https://www.statista.com/statistics/290516/total-annual-visits-abroad-by-united- kingdom-uk-residents/ * 2 https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism/ bulletins/attitudestowardscovid19amongpassengersarrivingintotheukfebruary2021to- june2021/february2022
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