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FINANCIAL HEALTH OF TRAVEL AGENCIES AND TOUR OPERATORS IN THE CZECH REPUBLIC: EVIDENCE FROM BANKRUPTCY MODELS
Abstract
Background: Tourism industry belongs to the relative young and dynamically expanding sector of economy in post-communist countries. According to Czech Ministry of Regional Development tourism industry created on average 3 percent of gross domestic product in last ten years in the Czech Republic. The study is focused on travel agents whose main task is to mediate tourism services and take the form of travel agencies and tour operators. The paper aims to assess the financial health of tour operators and travel agencies in the Czech Republic in 2014 using the bankruptcy models. Methods: The data are taken from database Albertina CZ Gold Edition. This database contains information on all profit and non-profit entities in the Czech Republic, which have been assigned registration number (I?). We use data about travel agencies and tour operators (group 79.1 according to Statistical classification of economic activities in the European Community Rev.2) for the years 2014. To assess the financial health, the selected bankruptcy models are employed, specifically Altman Z’-Score and Z’’-Score models. Results: The results show that approximately 30 percent of firms were in financial distress and was threatened by potential bankrupt according to both Altman’s models in 2014. The proportion of firms in good financial condition was between 40-60 percent depending on applied model. There were also no significant differences in findings between travel agencies and tour operators. Conclusion: The number of travel agents is relative high in the Czech Republic and this number converted per capita becomes to the highest in the European Union. The findings show that approximately 30 percent of existing travel agencies and tour operators were threatened by bankruptcy in examined year and it is expected that the market will evolve towards a reduction of their number.
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