Overcoming Borders: a Financial Analysis of Tourism Sector in Italy

Tourism is one of the economic sectors most involved in the movement of people and capital between countries. The analysis is focused on firms that offer accommodation services and, in particular, hotel companies and groups. In the last decade, these realities have hardly suffered from the effects of the economic crisis, aggravated by the overcapacity of national and international supply, and the power of online portals. This research aims to analyze and interpret the financial and economic conditions of this industry, in order to identify the potential entrepreneurial responses able to encourage the return to prosperity. The current results recorded by the sector is affected both by unfavorable conditions of specific competitive factors linked to demand and supply of accommodation services, and by constraints imposed by financial institutions and credit markets. For these reasons, the research aims to deepen the analysis of the relationship between hotels and banks, verifying the correlated impact on firms’ performance. The study is based on the use of advanced financial statement analysis techniques, for measuring the main economic ratios and financial flows, and the application of logistic regression models for determining the relationships between variables. The data for the empirical analysis are taken from the Bureau Van Dijk’s Aida database and refer to the years 2013-2015. The sample is made up of over 12,000 Italian companies. In this country, tourism is one of the economic sectors with the greatest strategic importance (it contributes to over 10% of national GDP). The sector is characterized by a high degree of fragmentation and the widespread presence of family businesses: about half of the sample has a turnover of less than 500,000 EUR. Alongside these realities, large international groups are active in the hospitality market, especially in the big cities, destinations of both art and business tourism. The competition with the large cross-border hotels’ chains emphasizes the importance of access to credit conditions for small to medium businesses. In fact, for SMEs, the actual opportunities to access bank loans at sustainable prices are critical issues for an effective competition with foreign investments. Therefore, starting from the financial and income statements of the hotels included in the sample, the purpose of the research is primarily to provide a critical analysis of the latest developments of this industry in Italy, through the measurement of the key performance indicators. After the application of financial statement analysis techniques, the study aims to verify the relationships between the hotels performances with the borrowing costs (average interest rate applied by banks over time) and the levels of banks’ debts. The analysis is based on regression models, which aim to understand the correlations between the bank-firm relationship and the level of economic and financial results achieved. The final objective is to check the nature and the weight of the financial variables in conditioning business performances. The contribution that the work is intended to provide to literature and operating procedures is related to a better and updated knowledge of the hotel industry, as well as the identification of potential evolution in the financial structures of hotel companies. Finance has to be no longer a constraint to business development, but a support for the creation of value, even for small family firms