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Microeconomics of tourism among selected CEE countries: What influences profitability in a case of those profitable firms?

Author

Listed:
  • Tomáš Heryán

    (Department of Finance and Accounting, School of Business Administration, Silesian University)

Abstract

The paper has focused on financial management of medium-sized hotels and travel agencies in eight selected Central and Eastern European (CEE) countries. According to a business finance theory, there should be inverse relation between liquidity and profitability of companies. In general, if managers decrease firm's liquidity through investing into the fixed assets they should increase firm's profitability, which is caused by possible higher earnings from those investments. The aim of the study is to estimate how is profitability of those profitable tourism companies affected by selected financial variables, and decide whether the business finance theory is valid also within tourism industry among selected CEE countries. Annual data from Amadeus, the international statistical database are obtained from 1,957 hotels and 785 travel agencies from Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia. General Methods of Moments (GMM) with panel data is used as the main estimation method for period from 2006 to 2015. However, results of the paper have shown that the business finance theory is not valid either within both types of tourism companies nor among all selected CEE countries. Furthermore, it is obvious that a conflict between managers of tourism companies and their owners should have been paid more attention. A creating of retained earnings within the stockholders' funds when owners had reinvested the earnings back to the business had particular significance for tourism companies' profitability within the period affected by the global financial crisis, even in the case of those profitable companies.

Suggested Citation

  • Tomáš Heryán, 2018. "Microeconomics of tourism among selected CEE countries: What influences profitability in a case of those profitable firms?," Working Papers 0062, Silesian University, School of Business Administration.
    • Handle: RePEc:opa:wpaper:0062
    as

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    References listed on IDEAS

    as
    1. Stavros A Kourtzidis & Panayiotis Tzeremes & Nickolaos G Tzeremes & Tomáš Heryán, 2018. "Integration of tourism markets in Australia," Tourism Economics, , vol. 24(7), pages 901-907, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    CEE countries; tourism; financial management; cash conversion cycle; stockholders' funds;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • Z33 - Other Special Topics - - Tourism Economics - - - Marketing and Finance

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