Determinants of profitability in tourism industry: Evidence from Turkey

ABSTRACT: Tourism industry has become one of the key and main sectors in Turkish economic improvement in the last years. The strong bilateral relationship between the economy and tourism has led Turkey to achieve a remarkable rank of 6th in the world Tourism Organization Statistics. This research investigated the effect of internal, external and macroeconomic factors on the profitability of tourism industry considering the five large Turkish tourist companies from 1998 to 2011. With respect to the results of the regression analysis, it is concluded that the internal factors are more related to profitability than the other variables. In this case, capital adequacy (equity over the total asset ratio) and logarithm of size have a significant impact on ROAA (Return on Average Asset) and ROAE (Return on Average Equity), which appear as the indicators of profitability. It can be said that the profitability and financial performance of tourism industry is not affected significantly by the macroeconomic factors. Keywords: Profitability, Financial Performance, Tourism Industry, internal factors …………………………………………………………………………………………………………………………………………………………………………………………………………