Abstract
Tourism is one of the most important industries in the Mediterranean countries, which strongly contributes to the economic activity, capital investment and job creation. Therefore, the purpose of this paper is to examine the determinants influencing profitability of hotel companies in selected Mediterranean countries. Thereby, dynamic panel data models are estimated on an extensive dataset for the period from 2007 to 2015. The paper provides evidence on differences among internal profitability determinants of hotel companies operating in tourism competitive countries. The results indicate that the cash flow to operating revenue has a statistically significant and positive impact on profitability in all observed countries. The total asset turnover ratio is significant for all countries except Portugal, while labour productivity is significant only for Spain, which is also the country with the highest turnover per employee. The solvency ratio is positively related to profitability, except for Greece as the most indebted country. Size proved to be significant for hotels in Spain and Portugal, while age is the variable by which the countries mostly differ, as findings show a different impact of underlying variable on hotel profitability. Findings provide information to shareholders that would ensure profitability of hotel companies operating in different countries.
Highlights
Tourism industry is among the worlds fastest growing industries which generates substantial economic benefits, contributes to employment and encourages investments and innovation in the host country
The total asset turnover ratio is significant for all countries except Portugal, while labour productivity is significant only for Spain, which is the country with the highest turnover per employee
Considering that hotels are the most important tourist facilities as they are the drivers of investment, employment and innovation in tourism, the aim of this paper is to analyse the profitability of hotel companies in four Mediterranean countries: Croatia, Greece, Spain, and Portugal over the period from 2007 to 2015
Summary
Tourism industry is among the worlds fastest growing industries which generates substantial economic benefits, contributes to employment and encourages investments and innovation in the host country. Share of direct contribution of travel and tourism to GDP in 2016, which includes the economic activity generated exclusively by industries that are supported by tourists directly (hotels, airlines, travel agencies, etc.), was 10.7% in Croatia, 7.5% in Greece, 6.4% in Portugal, and 5.1% in Spain. In these countries, more than 85% of tourism spending was in leisure travel, while business travel had a smaller share. Foreign visitors’ spending had dominant position when compared to domestic travel spending in observed countries (Croatian Chamber of Economy, 2017)
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