To say that the COVID-19 pandemic has changed the hospitality landscape is an understatement. The changes due to the pandemic have brought most of the industry to its knees. Over the past year, whether it was state grants, Paycheck Protection Program (PPP) loans, or Employee Retention Tax Credits (ERTC), there have been so many opportunities for the industry to capitalize on the resources available to them. Were these funding sources enough to revitalize hospitality businesses and help them weather the storm?

As a business owner or operator, trying to forecast and project what the next year is going to hold has been extremely difficult. Will the pandemic subside or are there multiple resurgence waves ahead? Will the vaccine rates increase enough to allay fears and allow hotels to return to pre-pandemic occupancy rates? Predicting occupancy and rate increases has been a shot in the dark. Now is the time for business owners and operators to evaluate their business, analyze their options, and select the best strategy to fortify the business for the future.

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The best place to start is evaluating the current cash flow analysis, projections, and forecasts. To do this, business owners should analyze cash currently on hand, then project cash flow based upon occupancy and rates and backing out the cost of those revenues (typical expenses). Leveraging data analytics software or enterprise resource planning (ERP) systems can aid in making this process seamless. After this process and analysis is complete, an owner can project how long the business will survive in this environment.

What should an owner do if they realize their business cannot survive? If they’ve exhausted all options of funding through PPP loans, ERTC, and state grants, restaurant and hospitality owners should consider the possibility of selling their business. There is a tremendous amount of capital waiting to be deployed on hospitality assets and investors are searching for opportunities. As the M&A space heats up, business owners and operators should position their business to appeal to buyers if that is the avenue they chose to take.

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Now is the time to think about the future of your hospitality business by fortifying your cash flow or deciding if selling is an option. You are encouraged to contact your network of professionals and trusted business advisors to evaluate the best path forward. Accountants and advisors can help analyze financial data, both historical and future, and work through many best-case scenarios. If selling is not an option, make sure you gather the right team to maximize your return. Don’t let the opportunities slip away before you can react.

Citrin Cooperman is a nationally recognized, full-service CPA firm, currently ranked in the U.S. top 25. The firm offers assurance, tax, and business advisory services to help clients remain competitive in today’s market.

Jennifer Hogencamp is a partner in Citrin Cooperman’s Providence office, with almost 20 years of public accounting experience. Jen provides audit services to a wide array of clients including those in the education, hospitality, technology, and manufacturing and distribution industries.

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