The impact of the COVID-19 pandemic and associated risks on the financial performance of hotels

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Abstract

The COVID-19 pandemic significantly impacted Thailand’s hotel and tourism sectors. This research investigates the impact of the COVID-19 pandemic on the hotel industry in Thailand, focusing on profitability, liquidity, leverage, and operating activities. Data were collected from fourteen hotels listed on the Stock Exchange of Thailand (SET) from 2018 to 2022, yielding a total of 70 firm-year observations. The data were then categorized into two periods (before and during COVID-19). Ten financial ratios of the samples were examined to assess the financial changes during these periods. The study employs an independent sample t-test to assess the changes over time. The results show statistically significant differences in most variables of our study, with only three variables — current ratio (CR), debt-to-equity ratio (DE), and size (total assets — TA) — showing no significant change during COVID-19. Other variables illustrated a drastic decline, with profitability ratios turning negative and other ratios declining post-COVID-19. The results reveal a negative financial impact on the Thai hotel industry caused by the pandemic. Despite challenges, the stability in the financial structure and liquidity of the hotel industry in Thailand remains resilient. It emphasizes the importance of strategic planning, risk management, and the potential role of government support in preparing for future crises.

Keywords: COVID-19 Pandemic, Thailand, Financial Performance, Profitability, Hotels

Authors’ individual contribution: Conceptualization — K.P., T.L., M.T.K., K.T., and T.K.; Methodology — K.P., T.L., M.T.K., and K.T.; Software — K.T., T.K., and P.L.; Validation — K.P., T.L., M.T.K., K.T., and T.K.; Formal Analysis — K.P., T.L., M.T.K., and K.T.; Investigation — K.P., T.L., M.T.K., K.T., T.K., and P.L.; Resources — K.P., T.L., M.T.K., K.T., T.K., and P.L.; Writing — K.P., T.L., M.T.K., K.T., T.K., and P.L.; Supervision — K.T. and T.K.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: L83, G01, G32

Received: 20.02.2024
Accepted: 22.07.2024
Published online: 25.07.2024

How to cite this paper: Pemo, K., Lhamo, T., Khine, M. T., Terdpaopong, K., Kraiwanit, T., & Limna, P. (2024). The impact of the COVID-19 pandemic and associated risks on the financial performance of hotels. Risk Governance and Control: Financial Markets & Institutions, 14(3), 18–28. https://doi.org/10.22495/rgcv14i3p2