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

By Rafel Crespí-Cladera, Alfredo Martín-Oliver, B. Pascual‐Fuster. 2021

136 citations recorded by the source corpus.

Abstract 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.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/0d6f23b13f6e96e08590f2d73c931739e762a895

Citations in the corpus

• Research on financial early warning of mining listed companies based on BP neural network model (2021, unknown): “Crespí-Cladera et al. (2021) predicted the financial distress faced by Spanish hotel companies, and found that most of the hotel companies in financial distress are faced with solvency problems.”