Profitability Determinants of the Greek Hospitality Industry: The Crisis Effect

The hospitality industry remains one of the cornerstone sectors of the Greek economy employing hundreds of thousands of employees, contributing significantly to the Gross Domestic Product (GDP). The scope of this study is to examine the main determinant factors of financial performance of the Greek hospitality industry, especially during the sovereign debt crisis. We utilized the population of firms (limited liability companies and corporations) registered on the chamber of commerce during the fiscal years 2011–2013 and operating on the hospitality and food services sectors, leading to 13724 observations for analysis. Regression results indicated that firm size, sales turnover and operating cash flows contribute positively to profitability. On the contrary, firms with increased leverage and capital intensity (fraction of fixed assets) are associated with lower levels of profitability. Our study fills a gap in the existing literature on financial management of the hospitality industry in Greece, offering useful policy implications.