(Yicai) Oct. 21 -- The Chinese central government's decision to roll out policies to help resolve local governments' debts will help companies in the tourism and hotel industries reduce their accounts receivables, according to insiders.

"We have many local government procurement orders every year, and the payment collection situation is different from order to order," the head of a large Chinese tourism company told Yicai. "Some orders are paid quickly, while others are paid after a long time."

These are several ways for tourism enterprises and hotels to accumulate accounts receivables, including allowing customers to enjoy the 'buy now, pay later' financing mode, being involved in some local government-backed projects, and having participated in the Covid-19 quarantine hotel program sponsored by local governments.

During the pandemic, many hotels were requisitioned for quarantine purposes. For example, 700 hotels of Jin Jiang International Holdings were seized as of the end of 2021, and more than 1,000 structures of Huazhu Group were taken as of March 31, 2022.

"The government's expropriation of hotels was a relatively good business for enterprises during the pandemic," a manager at a large Chinese accommodation chain told Yicai. "But at the same time, some hotels were experiencing problems with piling accounts receivable when local governments were delaying payments."

As of the end of the first half of this year, Shanghai-based Jin Jiang had accounts receivable of CNY1.5 billion (USD211.2 million). Meanwhile, Xi'an Qujiang Cultural Tourism had accounts receivable of nearly CNY1 billion.

"The Ministry of Finance's efforts to support local governments in resolving their debts are good news for the tourism and hotel industry," said Wei Changren, founder of travel agency Jinlv Group. "The financial pressure of some enterprises will be alleviated, which will also result in increased investments."

Editor: Futura Costaglione