COVID-19 impact on the hospitality industry: Exploratory study of financial-slack-driven risk preparedness

The hospitality industry is regarded as one of the most affected by the consequences of COVID-19 pandemic, and the undefined persistence of the pandemic duration raises anxiety about the ability to recover from this dramatic situation. In this regard, the purpose of this exploratory study is to shed light on the COVID-19 risk preparedness of hospitality businesses, as driven by the financial slack holdings and persistence. The empirical findings confirm that their financial-slack-driven risk preparedness should be judged as relatively low. A majority of the examined hospitality businesses demonstrated low or insufficient financial slack holdings and recently have consumed their financial slack resources. Thus, the abilities of hospitality businesses to sustain the liquidity tensions that emerged after the COVID-19 outbreak are questionable. Facing this evidence, we draw conclusions about the necessary design of system interventions that could prevent bankruptcy in the hospitality industry.