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The Financial and Economic Performance of Hotels in Spanish Beach Tourist Destinations

Journal: Athens Journal of Tourism (Vol.2, No. 3)

Publication Date:

Authors : ; ;

Page : 141-152

Keywords : Hotel profitability; Indebtedness; Size; Spanish tourism;

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Abstract

This paper analyzes the differences in financial structure, size and profitability of hotels located in three main Spanish coastal areas: Costa Brava, Costa Dorada and Costa del Sol. The study focuses on the analysis of the financial statements of a sample of approximately 100 hotels, finding key differences in hotels’ performance in these three regional clusters of the hospitality industry. The three areas show significant differences in terms of hotel size, financial structure and economic performance. Τhe hotels located in Costa del Sol are much bigger than the hotels located in the other areas but this also implies higher levels of debt and accordingly higher interest payments with a negative effect on the profits level. Hotels in Costa Dorada have a size that allows benefiting from economies of scale, with reasonable interest payments. This size combined with higher occupancy rates are the main reasons for the better economic performance of this area compared with the other two. Finally, we found that there exist exit barriers due to the specificity of the assets involved in the hotel sector.

Last modified: 2015-09-05 00:27:43