Abstract
This paper intends to analyze the determinants of hotel SMEs' capital structure, using the theoretical reference framework and the main indicators suggested by the Trade-off and the Pecking Order theories. The financial information was collected from the AIDA database and concerned a sample of 145 Italian hotel SMEs. To evaluate the capital structure, we used a set of dependent (Total Debt, Long Term Debt and Short-Term Debt) and independent (Profitability, Assets Tangibility, Growth, Size and Age) variables consolidated in the literature. After testing the least-squares model (POLS) and the fixed effects model (FEM), we chose to use the FEM model for our analysis, as it had a greater explanatory capacity. The results showed that the variables considered have a different weight in explaining hotel companies' capital structure. In particular, profitability, assets tangibility and size were the most significant variables, while the growth and age showed less relevance.
Highlights
Tourism is considered one of the largest and most dynamic industries globally (Wang, 2015; Weiermair, 2006), contributing significantly to employment rates and economic growth
We developed the regressions using the least squares (POLS) and the fixed effects (FEM) models, to identify the model with the greatest explanatory capacity
To check which model is more efficient, we performed the Wald test, which suggests that the fixed effects model (FEM) model is more significant (TD: 18.788***; long-term debt (LTD): 7.477***; short-term debt (STD): 14.026***)
Summary
Tourism is considered one of the largest and most dynamic industries globally (Wang, 2015; Weiermair, 2006), contributing significantly to employment rates and economic growth. In 2017, in Italy, 5.5% of GDP and 6.5 of employment (equal to almost 1.5 million jobs) were attributable directly to tourism (WTTC, 2018). If we estimate the indirect and induced contribution, which includes the supply of goods and services activated by businesses in the tourism sectors and the consumption of tourism workers, the overall impact of tourism on GDP for Italy in 2017 is equal to 13%, a value above the average of the EU countries and the world economy as a whole. In Italy, the importance of large hotel chains is much more limited than in other European states. The Italian hotel companies are predominantly small and medium-size, contributing significantly to employment and producing a high added value (Eurostat, Structural Business Statistics, 2017; Banca d’Italia, 2019). Despite support programs at the EU and the national level, access to finance remains one of SME's key problems in some Member States
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