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Section 8. Economics of recreation and tourism
DOI: http://dx.doi.org/10.20534/EJEMS-17-3-58-61
Obreshkov Ivan Obretenov, Vesselina Velichkova Terzieva, University of Food Technologies - Plovdiv, Assoc. Prof. PhD, Catering and Tourism Department E-mail: obreshkov_ivan@yahoo.com
EVALUATION OF TOURISM ENTERPRISES ECONOMIC PERFORMANCE
Abstract: The current study aimed at various tourism enterprises in Bulgaria which differed on their location and size (seaside, mountain, city; and family). The economic performance of the tourist enterprises was evaluated by means of the following indicators: return on equity, liquidity, profitability, average revenue from one room available, average daily rate, etc. Summary and conclusions were synthesized and guidelines for further activities of tourist enterprises were set up.
Keywords: economic performance, tourism enterprise, indicators, efficiency, regional development, TIC.
Introduction
Tourism is defined in the economic literature as economic concept, specific socio-economic phenomenon, specific business, specific sector, and specific system. Tourism is one of the priority branches ofthe economy in Bulgaria [1, 214-220; 2, 160-168]. Its annual contribution constitutes about 12% of the national GDP. The economies of many municipalities are strongly influenced by tourism thorough its direct, indirect and induced effects. The 2015 tourism season in Bulgaria was the lowest one for the last eight years.
Since market economy mechanism determines the goal ofprofit for the tourism enterprises, they seek ways to reduce the production total costs [3, 149-155]. The analysis of the status of tourism enterprises are the basis for accurate and proper management decisions. Thus, the aim of the current study was to evaluate the activity of tourism enterprises in Bulgaria.
Material and methods of study
In order to identify the economic performance of the tourism enterprises, the following indicators were used: cost profitability, liquidity-liquidity coefficient, total liquidity ratio, return on equity (RoE), while the cost effectiveness of the hospitality activity was evaluated by the quantitative indicator for measurement of employment and income in hotels RevPAR — Revenue Per Available Room, and ADR — Average Daily Rate. The former was obtained by dividing total revenues by the total number of available rooms, and the latter was calculated as the ratio of earnings to the number of rooms sold.
For the purpose of the study, tourism establishments located in various regions of the country (seaside, mountain and city) and family hotels (up to 20 rooms) were selected. The number of family run hotels in Bulgaria increased significantly in the last decade, due to the development of alternative forms
of tourism and particularly, rural tourism. The survey comprised the period of three consecutive years starting from 2014 till 2016. The survey data were collected from the financial records of the businesses and through conducting surveys among the customers of 105 hotels for their assessment of knowledge and skills of employees in tourism enterprises. Five grade scales were used where 1 was the lowest score, and 5 - the highest one.
Results and discussion
Table 1 showed the results from the calculations of the selected enterprises. The return on invest-
ments in the tourist venture capital is an indicator of particular importance for the owner of the tour company. In the tourism enterprises, the return on average equity for the studied period was highest for seaside tourism enterprises followed by the urban tourist enterprises.
The family hotels demonstrated the lowest level of return on equity. That could be explained mainly by the lower revenues. According to Walsh [4, 31-37], this is a low level of this indicator, since the return on equity is an important lever for generating value for the enterprise.
Table 1. - Main economic indicators for the activity of tourism enterprises (C - city; F - family; M - mountain; S - seaside)
Enterprises Type Profitability,% Liquidity RoE RevPAR ADR
Panorama S 39.58 3.15 2.24 124 123
Magnolia S 28.62 2.84 2.48 108 137
Zdravets M 18.64 1.94 0.94 67 104
Rojen M 22.73 2.25 1.34 84 83
Zora C 11.38 2.08 1.82 52 68
Aida C 16.45 1.63 2.16 47 72
Bachkovo F 14.32 1.26 0.86 32 62
St.Constantine F 8.47 1.04 0.92 27 58
Over the years this indicator varies mainly due to the variation of the profit after taxes. The low level of return on equity means that the return on the invested own funds is suspended in time. It is known that the tourist business has a slow return on equity (10-15 years). Managers should pay more attention to the tourism product diversification and the improvement. The hotels overcame the crisis in 2007-2010, when the levels of these indicators were negative. Since then a positive trend started and return on equity showed slight increase. The greater the proportion of foreign capital in the amount of the total invested capital in the tourist venture, the higher the return on equity. This phenomenon is called "leverage" (leverage factor). According to the ratio between own and foreign capital, enterprises
could be classified as enterprises with optimal capital structure (equity is about 70%). The capital structure of the enterprise is important, but not a defining characteristic, and its effectiveness depends both on the profitability of the activities of the tourism establishment, and of the foreign capital. Liquidity characterizes the ability of tourism enterprise to repay its current obligations [5, 40-41]. It is known that liquidity is recommended to be over 1. Liquidity depends to a large extent on the management of tourism enterprise. The liquidity of the studied tourist enterprises was at relatively good level. The seaside tourism enterprises showed good operational management and did not allow any overdue on short-term debts. The most serious liquidity problems were experiencing family hotels, mainly
because of a shortage of funds after payment of taxes, fees, salaries, etc. The additional costs increase is due to activities not directly related to the main tourism product — night [6, 51-55]. Family hotels invest financial resources in turnover to increase the revenue, but to be liquid, they should set aside funds and repayment of short-term obligations.
Profitability of the activities of tourism enterprises reached the highest levels in seaside tourism enterprises. After the crisis, hotels began to increase their effectiveness of their activities. The current study revealed that fact most in the case of seaside hotels. Mountain hotels achieved lower levels of profitability. The studied Zdravets hotel was intensively visited since the area around the hotel was properly managed: mountain trails, ski-track, tennis playground, horse riding, children's playground, etc. Family hotels achieved the lowest profitability. Family-run Bachkovo hotel possessed absolute com-
Table 2. - Assessment of knowledge and
petitive advantages due to the adjacent prominent Bachkovski monastery, although the results achieved were insufficient. The analyses showed that the seaside hotels obtained on average $100-120 revenue from the sale of each room. As RevPAR included occupancy, usage of the hotel base, it provided an idea how the tourism enterprise utilized the rooms.
Human capital plays extremely important role in the tourism production process. The employee is both mediator in the provision of tourism product and part of it. Employees should demonstrate technological skills as well as solid psychological skills to communicate with different personalities, ability to evaluate each situation, and preparedness to provide innovative and creative approach to each situation. The employees must recognize the moods of the guests, their habits and lifestyle, and based on them, to offer that service which exceeds customer expectations [7, 213-218].
skills of employees in tourism enterprises
Criterion Evaluation
1 2 3 4 5
knowledge and skills
education — a University, a College in tourism X
fluency in a foreign language X
professional experience X
work with computer systems, with information systems X
ability for sales X
personal and business skills
communication skills X
responsibility X
organization (the ability to plan your work) X
team working skills X
loyalty to the company X
correctness X
resistance to stress X
striving to achieve results X
The results showed low ratings in terms of professional experience and ability for sales, and also the ability for work organization. Employees of the hotels demonstrated responsibility in their work,
loyalty to the company and had the drive to achieve results and growth in the hierarchy. Personal and business communication skills, honesty, resistance to stress received low values. Not all employees had
university or college degrees in the field of tourism. This affected their behavior at work and the manifestation of their personal and business qualities.
Conclusions
The drive for results and improving the efficiency of the organizations will force the Bulgarian tourism enterprises to adapt more innovative methods such Six Sigma, Lean Six Sigma, etc. At the moment not all of the opportunities have been enough utilized. Positive trend of change was identified, but the eco-
nomic performance of the tourism enterprises was unsatisfactory. The best results were achieved by seaside hotels. In order to improve the economic performance of the activities, proper management skills and operational costs reduction were needed. The specific role of the human capital in the creation of the tourism product required the improvement of its management by providing safe and healthy working conditions, motivation drivers, education and training, and growth in the hierarchy.
References:
1. Obreshkov Ivan. Tourism business in Bulgaria in the context of Europe - 2020. Sborník recenzovanych príspévkú ze 4. Mezinárodní védecké konference. - 2015. - P. 214-220.
2. Obreshkov Ivan. Tourism trends in Plovdiv. Sborník príspévkú 5. Mezinárodní védecká konference: Aktuální trendy lázeñství, hotelnictví a turismu. - 2016. - P. 160-168.
3. Lulcheva Ivanka. Condition of small and medium-sized enterprises in the hotel industry in Bulgaria, Sciences works, volume LVI, Academic publishing, Agricultural University, Plovdiv, - 2014. - P. 149, (In Bulgarian).
4. Walsh K. Key factors in management, Sofia, ed. InfoDar, - 2008 (In Bulgarian).
5. Lulcheva Ivanka. Hospitality, Training guide, Academic publishing, Agricultural University, Plovdiv, -2016 (In Bulgarian).
6. Lulcheva Ivanka. Economic performance of the family-type hotels. Proceedings of 15-th International Conference on Economic Sciences. East West Association for Advanced Studies and Higher Education GmbH. Vienna, Austria, - 2017. - P. 51-55, (In Bulgarian).
7. Lulcheva Ivanka. Service quality in four star hotels in Bulgaria - evaluation, analysis and trends, Agricultural sciences, Plovdiv, - Volume VIII, - Issue 20, - 2016. - P. 213-218, (In Bulgarian).
