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BTG Advisory: Helping your business fly again

Posted: 15th November 2021
BTG Advisory: Helping your business fly again

While barely any sector has found itself immune to the effects of the pandemic, the travel industry has arguably faced - and continues to face - greater challenges than most. Even as we look towards emerging from the worst of restrictions on business, challenges continue to plague the industry. While operations have slowly started to resume, trade remains subdued as a cloud of uncertainty dampens demand from cautious would-be travellers.

A combination of changing consumer habits, two disrupted summers, the end of furlough, ATOL renewal criteria, and wage inflation has created the perfect storm which shows few signs of abating.

With further government support not seemingly on the horizon, those within the industry must instead look towards how they can make their business work within this new landscape.

While many companies will be able to adapt in the fullness of time, some adjustment to how the business is funded, operated, and resourced in the short- medium-term may be required while cash generation and hopefully profitability catches up. A process of targeted restructuring and an assessment of current operations, can ensure the business is functioning in the most efficient and cost-effective way possible.

Streamlining and cutting costs

When it comes to restructuring a business, there is not a one size fits all solution. There are a multitude of ways this can be achieved and there is value in an independent business review to help assess options and highlight quick wins which could include discontinuing certain operations or products, changing the supply chain, re-negotiating key contracts or payment terms. Highlighting non-performing areas can allow for time and resources to be directed towards more profitable areas of the business.

Cash is King: Refinancing your company

Despite the changes the industry has experienced, cash remains king. Whilst businesses may hope for the best, it is vital to plan for the worst and ensure that your company has comfortable cash reserves which will allow you to trade through until the time when the business can start generating positive cash.  It is critical to identify any liquidity pinch points early to allow maximum time to obtain additional cash.  Many businesses fail because despite strong balance sheets, they simply do not have the cash available to pay liabilities when due.  

Whilst some lenders are being cautious with the travel sector, particularly after two difficult years of trading, there are a wide range of funding solutions, both debt and equity, to help navigate through a liquidity crunch. 

At BTG Advisory, we can work alongside you, and harness our relationships with lenders to help secure you the best possible funding terms, even if you have financial challenges during the pandemic.

For others, an exploration of equity options including potential M&A deals, may be required to increase the chances of survival. While short-term optimism within the industry may be low, for those with the financial power to withstand this period of uncertainty, a brighter long-term future can be seen. This has kept activity levels within the M&A environment buoyant on both the buy and sell sides, with private equity firms poised to acquire these travel companies whose owners have decided to sell up or who need an investor with deeper pockets to weather the storm.

Preparing for a post-pandemic world

The Covid-19 pandemic has had a seismic impact on the travel industry over the past 18 months and whilst a significant focus on survival is critical, it is also worth considering how best to thrive, in this new environment.

If you anticipate future challenges or want help with potential opportunities – or if your company is already feeling the effects of comprised cash flow – you should make it a priority to seek expert help and advice as a matter of urgency.

The sooner advice is sought, the more options will be open to your company, greatly increasing the chances of effecting a successful turnaround or sustained growth and profitability. BTG Advisory can assist with M&A, financing or restructuring options to ensure the business is in the best possible position to deal with these changes no matter what the future holds.

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