Businesses in a weak state going into the coronavirus pandemic will struggle to raise cash to survive, Barclays head of hospitality and leisure Mike Saul has warned.
Saul forecast “more failures” as the industry emerges from the crisis and “a lot of change to come” as retailers reduce their high street presence.
Speaking on a Travlaw industry webinar, Saul said: “The fundamental issue now is consumer confidence.
“A lot of people are waiting. A lot of people are looking at alternatives to overseas holidays. When will they feel comfortable to make a booking?”
He hailed the various government financial-support schemes for businesses, saying: “Each has been set up pretty quickly.” But he insisted: “If a business could not afford it [a loan] at the end of last year, it probably could not afford a lot of leverage now.”
Saul told the webinar: “In the fourth quarter of last year, after the failure of Thomas Cook, a lot of companies were banking on better margins [this year].”
Now, he said: “Making more [financial] head room available is not an option. This is a high-risk sector [and] credit card companies will take a view. There is general pressure.
“When businesses are working with small margins and using customers’ money to run a business – which is the normal way of operating in travel – it leaves you very skinny when there is a problem.
“Maybe there will be a [general] move to CAA trust arrangements or toward keeping customer money separate.”
Saul warned: “There is a lot more change to come – removing some of the high street presence, reducing staffing.
“There is a question whether there will be as many retail outlets going forward. There is a significant shift to digital solutions.”
He rejected the idea that the economy would see a V-shape recovery in favour of what he called “a reverse-tick recovery”.
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.