Financial Leasing and Operational Leasing: An Early Assessment of the Impact of COVID-19 Pandemic

Introduction

It is both difficult and ineffective for firms to meet the resources they need to reach their goals by continuing their development, entirely from their equity capital. Therefore, companies finance some of their needs in various ways and methods instead of purchasing them with cash. At this point, leasing emerges as an important practice that meets the needs of investors that do not want to spend their equity on investment goods or whose equity is not sufficient to acquire investment goods. Leasing is based on the idea that the main benefit and profit arising from the use of the goods, not from the ownership. The main reason for the need of firms for investment goods is the economic benefit they will obtain as a result of the operation of this investment good. In other words, companies that are aiming for maximum profit want to increase the profit obtained as a result of the use of this product rather than having ownership of the product. For this reason, leasing becomes an important alternative for companies to acquire investment goods. With leasing, companies can both get rid of some of the burdens caused by the right of ownership and provide and renew products faster according to the needs of the day.

Leasing methods are one of the most common needs meeting methods in the tourism and hospitality markets. Although there are many reasons for this, the main reasons include the asset structure these sectors have and use, the excess of capital-intensive investments in the market, seasonal changing needs, close relations with various sectors that require different specialties and changing demands with changing lifestyles. The choice of leasing methods provides companies in the sector with significant competitive advantages. In this sector, which is constantly being renewed and where international competition is high, the leasing method is an important advantage. Tourism and hospitality companies that meet their needs with this form of financing can mobilize their existing resources for different opportunities and do not have problems with cash flow. In this sector, the leasing method is preferred both as an alternative to the purchasing method in terms of substitution relationship and is used in a complementarity relationship.

Tourism and hospitality expenditures are considered as discretionary expenditures rather than mandatory, and demand elasticity is argued to be extremely high. Therefore, the tourism and hospitality sector is known as one of the fastest and most affected sectors by crisis, uncertainty, and fluctuations. This sector, which has experienced quite painful experiences from past crisis periods, is also strongly affected by the Covid-19 pandemic, which affects the world today, directly and indirectly. As of the period when the study was prepared (2020-December), the effects of the Covid-19 pandemic, which caused more than 70 million cases and more than 1.5 million deaths, are increasing rapidly and predictions about when it will end are not clear. At the end of the epidemic, it is not possible to predict how much the overall effects of this process will be and what will be the total destruction it will create in the tourism and hospitality sector in particular. Curfew, travel restrictions, and business activity stops imposed by many countries directly affect the sector, while the economic difficulties and psychological effects caused by the pandemic indirectly reduce the demand for the sector in quality and quantity.