Financial distress in the Austrian tourism industry: hotels and restaurants analysis

Abstract

Considering the limited number of studies on the early detection of crises and insolvencies in the tourism industry, there are several research gaps. Therefore, this study analyzes which financial and non-financial variables significantly influence the financial distress of the tourism businesses (hotels and restaurants) in Austria. The resource-based and network-based views were used as theoretical foundations to determine which variables influence the probability of financial distress, with a total of 776 observations from 2005 to 2015 inclusive. The results show that variables describing the endogenous unsystematic risk of tourism businesses (firm-specific level and destination level) make the greatest contribution to explaining financial distress, while exogenous unsystematic and exogenous systematic risk variables show little or no relevance.