NSW Credit Law

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Hospitality post COVID-19

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Hospitality post COVID-19

Hospitality post-COVID-19.

Further to our recent article regarding the hospitality industry post-COVID19, we have had a number of requests from within the sector to elaborate on what hospitality businesses should be doing now to take advantage of the upturn in the industry that has already started and is set to soar in 2021.

Who will benefit?

Businesses that reimagined and strategised their way through the economic downturn that was COVID-19 have found themselves in a position to take advantage of the upturn in the industry now that we appear to be on the other side. Businesses that have survived by reimagining their service offering and effectively participating in reinventing the way the industry trades can now reap the benefits and should do well in the long run.

Restaurants, clubs and bars have pivoted to offer take away, pre-packaged food to cook at home and fresh produce directly to their customers. Without a doubt, continuing to offer these services now the economy is reopening will assist in replacing some of the lost revenue but it will not replace it all. Businesses need to consider what their clientele are looking for in the new normal dining and drinking out experience moving forward and consider how they could best place their business to offer what the market wants.

We are coming into a new age for the hospitality industry that will provide excellent opportunities for those ready to take advantage. Moving out of lockdowns, the general public (the market) will have a greater sense of support and community spirit. Effectively, this could translate as a trend towards Australians supporting Australians. Businesses that take the time to reinforce what they stand for, put in the effort to stand out and communicate that effectively to their customers will flourish.

Hospitality is a hearts and minds industry so use authentic and transparent communications to bring your prospective clientele on the journey with you as you look to re-establish your place in the market. Give consumers a direct line to your businesses behind the scenes operations. Show them how their support directly helps you support your staff and Australian suppliers and farmers. Your customers are ready to devour (literally) everything you have to offer in this new age. The supportive approach to communications will help businesses reconnect to their old consumers and create new customers.

Making sure your business is financially ready.

Businesses in the hospitality sector need to consider their current financial situation closely. It is important that financial plans and budgets are in place, with consideration given for how the new market might change key assumptions when financial planning. Businesses will need to consider:

  • What are the funding requirements for the reinvestment and restructuring stage?
  • Are those requirements realistic?
  • What is the resulting debt profile?
  • Can you carry the debt or do you need to renegotiate payment terms with creditors?
  • What will trading performance look like, factoring in the new future environment?
  • Can the business invest in the capital spending needed to operate in the new conditions?
  • Does budgeted performance service and amortise the resulting debt profile?
  • If not, what will the business do? (Debt deferral/rescheduling, equity injection or swap, landlord deals).
  • Have difficult conversations with banks and landlords so that debt profiles are considered, and that this profile is serviceable.
  • If it is needed to survive, find ways to defer liabilities and capex.

The COVID-19 period has had a serious effect on the finances of a lot of small business and consumers within the community, but we are also aware that a lot of people have cash saved and ready to spend. Consumers have deferred spending on holidays and entertainment for a year now. Those who were lucky enough to remain in employment have savings that they want to spend and they want to get out and socialise (responsibly). Businesses need to be ready for this.

The post-COVID-19 new normal will be an incredibly different landscape that none of us can predict, but businesses that plan, pivot and act now will be best positioned to take advantage of what could become a boom period for hospitality.

NSW Credit Law can assist small to medium business with:

  • Debt negotiation with your creditors
  • Review of legal proceedings and prospects of defence
  • Defence of legal proceedings
  • Response to bankruptcy proceedings
  • Response to wind-up proceedings
  • Credit rating default reviews
  • Credit rating default updates and removal
  • Credit rating judgment debts set aside
  • Hardship and vulnerability assistance
  • Referral to financial counsellors
  • Referral to our panel of Small Business Restructuring Practitioners
  • Pro-bono work considered for extreme hardship and vulnerability cases

Contact NSW Credit Law 02 4206 8951 or visit our website and fill in the enquiry form on our free consultation page https://nswcreditlaw.com.au/free-consultation/

References: KPMG, SV Partners, ASIC

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