Highlights:
Resilience continues to be tested as industry slowly restarts
Evolving infection patterns are driving continued uncertainty. Resilience and agility will be key to survival over the coming year.Customer attitudes and expectations continue to rapidly shift
Issues like health, safety, environmental sustainability and ethical behavior are influencing customer purchasing decisions.Cost, cash management and efficiency to remain critical for some time
Facing continued economic and market instability, industry players are focused on long-term survival.
Industry insights
The outlook for hospitality, tourism and leisure companies has always been strongly influenced by external factors; geopolitical shifts, a rapidly evolving industry, agile competitors, and changing consumer demands can often have rapid and significant impacts.
The COVID-19 pandemic has been the most disruptive external factor to hit the industry in decades. In a few short months, the effects of the pandemic have forced many hospitality, tourism and leisure companies to reshape their business models and redirect their focus in order to rapidly enhance resilience and agility.
For the hotel sector in particular, overall uncertainty about the recovery trajectory and additional costs required to adapt to a COVID environment are weighing most heavily on those businesses with higher fixed costs (such as leases or debt).
With the 'end of COVID-19' seeming like an stubbornly amorphous concept, companies in the hospitality, tourism and leisure industry remain focused on resilience and agility. While there are clearly some outliers (think food delivery services), most companies operating in this sector remain highly focused on reducing costs, conserving cash, maximising efficiency and - particularly where it allows operators to capture valuable data adopting digital technologies.
How can KPMG help?
Confidence in challenging times
Preparing your business to meet these challenges is a complex process. It can mean rethinking key elements of your supply chain, offering, customer experience and revenue model. At the same time, recent events create an extraordinary opportunity to revisit existing or outdated business models and pivot to greater agility and profitability.
KPMG’s teams of experienced Hospitality, Tourism and Leisure restructuring professionals help companies across the sector to meet challenges like these. We tailor our services to your unique needs, thinking carefully about how recent changes have affected your business, working with you to help ensure stakeholder confidence through this dynamic phase, allowing you to emerge stronger and fitter for the future.
Case studies
The situation:
With a large portfolio of pubs across their major market, this lender wanted to assess the financial situation of more than 200 individual files.
The solution:
With deep experience and a strong reputation in the market for helping manage large pub portfolios and high profile hospitality brands, KPMG was selected to conduct the review. KPMG professionals not only performed desktop financial reviews of each of the files, they also helped the lender set their file management strategy and provisioning.
The outcome:
KPMG’s work provided the lender with deep market knowledge of their asset pricing and valuations, allowing them to set their strategy going forward.
The situation:
With COVID-19 significantly impacting this casino resort’s ability to repay their loans, the lender was looking for an opportunity to protect their investment.
The solution:
KPMG conducted an Independent Business Review to allow the lender to better understand the position of the company. With the support of the secured lender and the resort manager, KPMG reviewed a wide range of areas including historical financials, current financial positions, forecast financials, Covid-19 related issues, security position and valuation of the equity.
The outcome:
Having calculated the security position and estimated realizable value, KPMG helped the lender present the publicly-listed asset to the market in a highly successful sale campaign.
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