Financial distress in the hospitality industry during the Covid-19 disaster

Bibliographic Data

ID11442116
AuthorsRafel Crespi-Cladera, Rafel Crespí‐Cladera (0000-0002-3495-7981, Universitat de les Illes Balears), Alfredo Martín-Oliver (0000-0001-9271-7364, Fundació Universitat-Empresa de les Illes Balears), Bartolomé Pascual-Fuster (0000-0001-7504-8883, Fundació Universitat-Empresa de les Illes Balears, corresponding author)
Year2021
Volume85
Pages104301
Publication date2021-08-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueTourism Management (JOURNAL)
Journal identifiersISSN: 0261-5177 • E-ISSN: 1879-3193
PublisherElsevier BV (PUBLISHER)
DOI10.1016/j.tourman.2021.104301
OpenAlexW3132360254
LanguageEN
Citations received15
References cited27

We implement the stress test methodology of the banking industry in conjunction with a Logit model of bankruptcy with parameters estimated with data from the Great Recession (2008–2013) to predict which firms would face financial distress among Spanish hospitality firms during 2020 due to the Covid-19 disaster. The predictions from both methods rely on the last accounting data available and on the expected revenue drop for 2020. Both methods coincide to predict that 25% of these firms will face a financial distress situation if revenues drop 60%. This forecast raises up to 32% of firms if revenues drop 80%. Financial distress will affect mainly small firms. Most of the firms in financial distress will face solvency problems, with total assets being insufficient to pay all debts

Bankruptcy · Business · Debt · Economics · Market liquidity · Recession · Revenue · Solvency · Banking stability, regulation, efficiency · Financial Distress and Bankruptcy Prediction · Insurance and Financial Risk Management · Finance

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