COVID-19, government measures and hospitality industry performance.

David Yechiam Aharon,Arie Jacobi,Eli Cohen,Joseph Tzur,Mahmoud Qadan,Stefan Cristian Gherghina

doi:10.1371/journal.pone.0255819

David Yechiam Aharon, Arie Jacobi + Show 4 more

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https://doi.org/10.1371/journal.pone.0255819

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Abstract

This study explores the interplay between public measures adopted by the U.S. government to combat COVID-19 and the performance of the American hospitality industry. The recent global pandemic is a natural experiment for exploring the role of government interventions and their direct impact on hospitality stock returns in the U.S. financial market. Overall, our findings show that most of the government interventions were associated with a negative response in the returns of the hospitality industry, a response that became more negative as the COVID-19 pandemic evolved. Similar patterns were also detected for other industries such as entertainment and transportation that are closely related to hospitality. The findings we document are fundamental to understanding the trends and fluctuations in hospitality stocks in the current crisis and any similar crisis in the future.

Highlights

The recent COVID-19 crisis may be one of the most influential and unprecedented events for firms, investors, policy makers and many other market participants
Zaremba et al [22] examined the impact of government interventions on stock market liquidity in 49 countries during January-April 2020, and demonstrated that the effect of government interventions is limited in scale and scope
The results indicate that uncertainty due the COVID-19 pandemic is the driver of the variation in the stock prices in the hospitality sector

Summary

Introduction

The recent COVID-19 crisis may be one of the most influential and unprecedented events for firms, investors, policy makers and many other market participants. The negative impact of the COVID-19 crisis is mainly affecting service-oriented sectors such as the hospitality industry The latter functions as a powerful vehicle for economic growth and job creation all over the world. We contribute to the literature dealing with the impact of government interventions and their reflection in asset prices during times of crisis (e.g., [11, 16,17,18,19,20,21,22]) by sorting the intervention into economic (e.g., income support, debt contract relief) and non-economic (e.g., travel restrictions, school closings) measures and exploring their consequences.

Literature review

Findings

Summary and conclusions