(Yicai) Oct. 21 -- The Chinese central government’s decision to roll out policies to help resolve local government debt may alleviate the issue of unpaid accounts receivable owed to companies in the tourism and hotel sectors, according to industry insiders.

“We receive a significant number of local government procurement orders every year, but payment timelines differ depending on each government's situation,” the head of a large Chinese tourism company told Yicai. “Some pay quickly, while others have longer payment cycles.”

Tourism and hotel businesses accumulate accounts receivable in several ways, including operating on a 'buy now, pay later' model, being involved in local government-backed projects, and having there accommodation requisitioned in the Covid-19 pandemic.

During the pandemic, many hotels were commandeered. For example, 700 of Jin Jiang International Holdings were being used as of the end of 2021, and more than 1,000 of Huazhu Group as of March 31, 2022.

“The requisition of hotels was a relatively good business during the pandemic,” said a manager at a major chain. “But while getting these orders, some hotels also ran into trouble with accounts receivable.”

As of the end of the first half of this year, Shanghai-based Jin Jiang had CNY1.5 billion (USD211.2 million) owing, while for Xi'an Qujiang Cultural Tourism it was nearly CNY1 bil

“The finance ministry's efforts to support local governments in resolving their debts is 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