Study of business failure in the hospitality industry from both microeconomic and macroeconomic perspectives

Business failures in the hospitality industry were examined in this study from both microeconomic and macroeconomic perspectives. In the micro-level study, this paper developed a discriminant model for predicting bankruptcy of hospitality firms (lodging and restaurant firms). This model achieved a 92-percent accuracy in classifying the in-sample firms into bankrupt and non-bankrupt groups one year prior to bankruptcy, and a 83-percent accuracy two years prior to bankruptcy. This model also correctly predicted an out-of-sample bankruptcy from one to four years in advance. Additionally, in order to eliminate the industry effect, the study estimated a bankruptcy prediction model for the restaurant industry. This model had a 94-percent classification accuracy one year before the occurrence of bankruptcy. The results of the micro-level study demonstrate that fairly accurate bankruptcy prediction of hospitality firms is possible by using financial ratios and discriminant analysis; In the macro-level study, the impact of macroeconomic conditions on the lodging industry failure rate for each state was investigated. The results suggest that two macroeconomic factors, change in real gross state product and change in disposable personal income, have significant impact on the lodging failure rates. This study is useful for the lodging industry in that it will enable lodging firms to make decisions to reduce the exposure to business failure based on projected economic condition.

Name thesis:degree_name

Master of Science (MS)

Level thesis:degree_level

Thesis

Discipline thesis:degree_discipline

Hotel Administration

Grantor dc:publisher

University of Nevada, Las Vegas

Year

1999

Author dc:creator

• Gao, Luyuan

Contributors dc:contributor

• Zheng Gu

Statement dc:rights

• IN COPYRIGHT. For more information about this rights statement, please visit http://rightsstatements.org/vocab/InC/1.0/

Language dc:language

English

Identifier

https://oasis.library.unlv.edu/rtds/999

OAI identifier oai:identifier

oai:oasis.library.unlv.edu:rtds-1998