Author(s): Luis Lima Santos, Conceicao Gomes, Catia Malheiros, Filipa Campos
The hospitality industry in Portugal has grown significantly through the year 2019, making a significant contribution to the country's economy. However, with the emergence of the Covid-19 pandemic, this industry was severely damaged and saw its profitability affected. Thus, it becomes essential to evaluate the hotels’ performance, based on ratios and indicators that allow income to be related to other variables in the financial statements and thereby assist managers in the decision-making process. Thus, this study aims to measure the performance of Portuguese hotels through financial profitability ratios, more specifically the return on equity, return on assets and return on sales.
The study, through a quantitative methodology, collected data from 2,008 hotels between 2016 and 2020, with the help of the SABI platform. Variables such as region, net income for the year, equity, financial costs and losses, total assets, operating income, and turnover were used to calculate and analyze the profitability ratios and the results were analyzed using SPSS software.
The conclusions demonstrate how essential profitability is to inform hoteliers about performance. The Portuguese hotel industry, considered a driver of the country's economy, performs very well in terms of profitability indicators until the Covid-19 pandemic, a period that showed severe breaks in profitability and the need for extraordinary measures for recovery. It has become clear that the overall performance of hotels differs between regions, so the calculation of average profitability is crucial for hoteliers to effectively benchmark.
This research has theoretical and practical contributions, as it supports the broadening of knowledge about financial ratios and managers' perceptions of the importance of their use in such a competitive industry. In addition, the study aims to fill a gap in the literature about the importance of analyzing hotel performance through profitability ratios in Portuguese hotel companies.