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

Tijana Matejić, Snežana Knežević, Vesna Bogojević Arsić, Tijana Obradović, Stefan Milojević, Miljan Adamović, Aleksandra Mitrović, Marko Milašinović, Dragoljub Simonović, Goran Milošević and Marko Špiler
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Tijana Matejić: Faculty of Organizational Sciences, University of Belgrade, 11000 Belgrade, Serbia
Snežana Knežević: Faculty of Organizational Sciences, University of Belgrade, 11000 Belgrade, Serbia
Vesna Bogojević Arsić: Faculty of Organizational Sciences, University of Belgrade, 11000 Belgrade, Serbia
Tijana Obradović: Faculty of Organizational Sciences, University of Belgrade, 11000 Belgrade, Serbia
Stefan Milojević: Audit, Accounting, Financial and Consulting Services Company “Moodys Standards” Ltd., 11000 Belgrade, Serbia
Miljan Adamović: Pharmacy Institution “Zdravlje Lek”, 11000 Belgrade, Serbia
Aleksandra Mitrović: Faculty of Hotel Management and Tourism in Vrnjačka Banja, University of Kragujevac, 36210 Vrnjacka Banja, Serbia
Marko Milašinović: Faculty of Hotel Management and Tourism in Vrnjačka Banja, University of Kragujevac, 36210 Vrnjacka Banja, Serbia
Dragoljub Simonović: Faculty of Organizational Sciences, University of Belgrade, 11000 Belgrade, Serbia
Goran Milošević: Faculty of Law, University of Novi Sad, 21000 Novi Sad, Serbia
Marko Špiler: Faculty of Organizational Sciences, University of Belgrade, 11000 Belgrade, Serbia

Sustainability, 2022, vol. 14, issue 8, 1-44

Abstract: 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.

Keywords: COVID-19; tourism crisis; hotel industry; bankruptcy risk; Altman’s Z-score models; financial sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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