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Surviving the recession with efficiency improvements: The case of hospitality firms in Portugal
Author(s) -
Patel Pankaj C.,
Guedes Maria João
Publication year - 2017
Publication title -
international journal of tourism research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.155
H-Index - 58
eISSN - 1522-1970
pISSN - 1099-2340
DOI - 10.1002/jtr.2132
Subject(s) - profitability index , recession , hospitality , intangible asset , productivity , profit (economics) , business , hospitality industry , return on assets , economics , labour economics , finance , tourism , microeconomics , economic growth , macroeconomics , political science , law
During a recession, lower profitability limits investments in new initiatives; significant cost‐cutting could deteriorate service levels; and sticky tangible and intangible resources limit a hospitality establishment's ability to reduce its asset base. Limited ability to cut costs or reduce asset base shifts the focus on improving efficiency. Drawing on panel data of 1,647 Portuguese hospitality establishments from 2007 to 2014, we find that an increase in the return on fixed assets made the highest contribution to operating profit, followed by an increase in the return on intangible assets. Increasing labour productivity had the lowest effect on operating profit.