Analysis of the causes and effects of trade debtors in the local hotel industry

Abstract

The recent introduction of the EU Late Payment Directive into our legislation stimulated a debate on how effective this will prove to be in our local industries. Thus, this study explored the effect such directive is having on the hotel industry within the context of debtors’ management; together with the importance such industry gives to debtors’ management. Various issues of debtors’ management were analyzed within each hotel category and this was done by the use of a questionnaire which was distributed to a sample from the 5, 4 and 3 star hotel categories.

Though from this study it emerged that the local hotel industry is experiencing high levels of credit sales which are taking much longer than stipulated to be paid, the Late Payment Rule till now, has yet proved to be of little help in improving such a situation. The main reasons identified in this situation were the recent introduction of such directive which implied lack of knowledge from the respondents and more importantly, that the hotel industry is operating in a buyers’ market where customers are the dominating players and hoteliers do not have the power to take appropriate actions with regards to defaulting debtors.