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Tourism: PwC: HoReCa businesses may drop by over 50% this year
The HoReCa sector is one of the most affected by this crisis, businesses figures in this field being expected to drop by over 50% this year,while the execution of contracts will be controversial, according to representatives of the consulting and audit company PriecewaterhouseCoopers (PwC). In this context, companies in the field will face both compensation and damage demands.
According to PwC consultants, after two months of lockdown, most states announced the relaxation of restrictions and the gradual resuming of social and economic activities. At the same time, the crisis generated by the coronavirus pandemic has generated huge losses to organizations which had to reduce or stop their activities.
“Among the most affected companies are those in the fields of HoReCa, transports for persons, constructions and real estate, non-food traditional trade and fashion. The reduction of demand and incomes, order cancellations and delays, the extension of execution and payment deadlines, additional costs are just a few of the reasons that lay at the basis of damage and compensation demands,”PwC says.
In these conditions, they consider that all companies affected can have in view mechanisms to recover losses and, at the same time, they must consider potential requests for losses addressed to them, resulting in big pressures on company finances, insurers and even the state. “More exactly, requests can be made from business partners, as part of insurance policies, from governments as result of measures and decrees adopted or within bilateral investment treatises. In point of mechanisms that have in view loss recovery, either effective losses (damnum emergens) or benefits not obtained (lucrum cessans), the damaged party must prove the losses it had – the quantity of losses, the connection between cause and loss and the event that generated the loss or infringement of obligations,” PwC consultants say.
Also, the “damaged party”will have to prove it took reasonable measures to reduce losses and show the losses were fully or partially compensated in other ways.
“At this moment, cash flow and management is the companies' biggest problem, but they must have in view to prepare the recovery stage, to gather evidence about possible losses, because later on it could be difficult, if not impossible to do it”, according to PwC.
PwC is a network of companies present in 157 countries, with more than 276,000 professionals who offer quality services in the field of audit, fiscal or business consulting.