Assessing the Impact of the COVID-19 Crisis on Hotel Industry Bankruptcy Risk through Novel Forecasting Models

In this paper, we assess the impact of the COVID-19 crisis on the bankruptcy risk of a sample of 100 hotel companies and, consequently, on the hotel industry in the Republic of Serbia. The assessment applies to the period, 2019–2026, with the use of the data on the financial indicators for 2015–2020...

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Bibliographic Details
Published in:Sustainability 2022-04, Vol.14 (8), p.4680
Main Authors: Matejić, Tijana, Knežević, Snežana, Arsić, Vesna Bogojević, Obradović, Tijana, Milojević, Stefan, Adamović, Miljan, Mitrović, Aleksandra, Milašinović, Marko, Simonović, Dragoljub, Milošević, Goran, Špiler, Marko
Format: Article
Language:English
Subjects:
Bankruptcy
Coronaviruses
COVID-19
Crises
Current liabilities
Economic development
Economic growth
Environmental impact
GDP
Gross Domestic Product
Hotels & motels
Indicators
Insolvency
Neural networks
Risk
Scoring models
Subsidies
Sustainability
Time series
Tourism
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Summary:In this paper, we assess the impact of the COVID-19 crisis on the bankruptcy risk of a sample of 100 hotel companies and, consequently, on the hotel industry in the Republic of Serbia. The assessment applies to the period, 2019–2026, with the use of the data on the financial indicators for 2015–2020. Five novel structural time-series models, which have the indicators derived from Altman’s EM Z″-score model as predictors, were used, and a new conceptual framework for assessing bankruptcy risk is provided. The framework expands the applicability of credit-risk-scoring models to multiyear predictions, and it takes into account the dynamism of the transitions of the firms among Altman’s risk zones. The predictions that were obtained when the Springate and Zmijewski scores were applied along with the Altman Z″-scores demonstrate the fair applicability of the scores for the models that are introduced here. The results of the models were confirmed by 270 artificial neural networks and they were compared to the results of the classical time-series models. The crisis started to have a negative effect on bankruptcy risk in 2020, and this effect is expected to rise until 2023; currently, in 2022, the highest number of hotel companies may be headed for bankruptcy. Amelioration in the position of the companies cannot be expected before 2024; however, even in 2026, the risk of bankruptcy will remain high when compared to the pre-COVID-19 period and, thus, the surviving companies will become more fragile to any further exogenous changes. These results provide a basis for the adaption of state-supported measures and business policies in order to withstand the crisis and to ensure sustainability.
ISSN:2071-1050
2071-1050
DOI:10.3390/su14084680