BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Milovan Stanišić, Ph. D Nikica Radović, Ph. D Jelena Nikolić, MA
Models for identify Peter Kralicek′s business success Kralicek′s DF indicator DF = 1, 5 X 1 + 0, 08 X 2 + 10 X 3 + 5 X 4 + 0, 3 X 5 + 0, 1 X 6 X 1 – net cash flow/total liabilities X 2 – total assets/total liabilities X 3 – profit before interest and taxes/total assets X 4 – profit befor interest and taxes/total revenue X 5 – inventories/total revenue X 6 – operating income/total assets
DF value indicator Financial stability >3, 0 Excellent >2, 2 Very good >1, 5 Good >1, 0 Medium >0, 3 Bad ≤ 0, 3 The beginning of insolvency ≤ 0, 0 Moderate insolvency ≤-1, 0 Strong insolvency
Models for identify Peter Kralicek′s business success Kralicek′s Quick Test K 1–share of capital in total soursec (capital/total liabilities) K 2–ratio between total liabilities minus cash and profit after taxation increased by amortization (total liabilities-cash)/(net profit+depreciation) K 3–viability of total assets in relation to operating profit (EBIT/total assets) K 4–solvency (net profit+depreciation)/operating income
Estimates of Kralicek′s Quick Test Indicator Excellent (1) Self-financing coefficient (K 1) >30% >20% >10% <3 <5 <12 <30 >8% <8% Debt repayment period in years (K 2) Total capital viability percentage (K 3) Cash flow in business income (K 4) >15% >10% Good (2) >12% >8% Mediu m(3) >5% Bad (4) <5% Insolvency risk(5) negative result FINANCIAL STABILITY >30 Negative result PROFITABILITY
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY • The aim of this paper is to evaluate business success of hotels in Serbia listed on the Belgrade Stock Exchange using Kralicek’s methods for business success estimation. • Subject of research ü 15 hotels wich are issuers of shares on the Belgrade Stock Exchange, sector I ü Financial statement for 2013 -2016 business year
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY 5 hotels Southern & Eastern Serbia Vojvodina 2 hotels 3 hotels Belgrade Western Serbia 15 hotels
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Constraints in research 1. Hotel facilities are owned but they stopped working they are leased out, so revenues are no longer a matter of accommodation 2. The activity of accommodation and food (activity code 5510) is not the only activity
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Research results DF indicator 2013. 2014. 2015. 2016. x 1 0, 3726 0, 1269 0, 2823 0, 3730 x 2 6, 6496 3, 6692 5, 5098 5, 9835 x 3 0, 0243 0, 0162 0, 0202 0, 0749 x 4 0, 1121 0, 0897 0, 1346 0, 1535 x 5 0, 0756 0, 1426 0, 3594 0, 1832 x 6 0, 3585 0, 2995 0, 3175 0, 3452 DF indicator 1, 9523 1, 1671 1, 8791 2, 6442 Good Medium Good Very good Financial stability assessment
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Research results Quick. Test indicator Self-financing coefficient (K 1) Debt repayment period in years (K 2) Total capital viability percentage (K 3) Cash flow in business period (K 4) 2013. 2014. 2015. 2016. value grade 52, 46% 1 50, 83% 1 56, 99% 1 56, 52% 1 21, 60 4 20, 37 4 17, 39 4 9, 47 3 2, 43% 4 1, 62% 4 2, 02% 4 7, 50% 4 11, 79% 1 12, 80% 1 14, 23% 1 70, 90% 1
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Conclusion ü new management of certain hotels decided to take loans for the purpose of reconstructing facilities in order to modernize the equipment for providing services as well as to raise the level of services ü investments are important in order to categorize facilities, continue to work, "revive" and improve the business of older hotels in the sector of accommodation in Serbia
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Conclusion ü the financial stability of analyzed hotels is satisfactory, with noticeably high business liabilities ü long repayment periods and low profitability are directly related to low percentage of capacity utilization and long-term indebtedness, which is specific to the current situation in the hotel business in Serbia
BUSINESS SUCCESS ANALYSIS IN HOTEL INDUSTRY Conclusion • In order to improve the business and financial situation, as well as increase the number of hotels, it is necessary to work on the development of business plans and strategies, as well as to adapt to the contemporary trends in the financial and tourist market, while promoting the competitive advantages of Serbia as a tourist destination.
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