Profitability management of tourism sector in AP Vojvodina

Tourism plays an increasingly important role in the economic flows of each country. Recognizing the tourist potential of AP Vojvodina is an important task for the creators of the economic policy of our country. In order to make a favourable tourism environment with quality tourist content and products, it is necessary for tourist entities to operate stably and successfully. The aim of this paper is to highlight the importance of financial performance of firms in tourism sector in terms of profitability. The subject of the paper is to analyse the effects of internal factors on profitability level of 3456 firms in tourism sector in AP Vojvodina for the period 2015-2019. The results of the analysis indicate that observed firms were profitable during the analysed period, where average ROA was 1.81% and average ROE was 3.4%. Empirical analysis shows that internal factors such as firm size, sales revenue, earnings before interest and taxes and financial stability have positive impact on profitability, while liquidity and debt negatively affect the profitability of firms in tourism sector.


Introduction
The tourism sector has a significant role as a source of economic growth in most economies in the world (Dimitropoulos, 2017). Namely, tourism sector represents an important potential of any national economy where a positive trend in tourism revenue has a significant role in realizing macroeconomic goals and social welfare (Milenković, Andrašić & Kalaš, 2017). Rodríguez-Díaz and Rodríguez-Díaz (2018) indicate that governments favour this sector because of its significant contribution to the gross national product. Since an ever-increasing number of people wants to travel, primarily in foreign country, tourism manifests one of the fastestgrowing industry in the world (Pavković, Jević, Jević, Nguyen & Sava, 2021). Tourism industry is among the world fastest growing industries, generating substantial economic benefits, as well as contributing to employment and stimulating investments (Dimitrić, Tomas Živković, & Blecich, 2019). Similarly, Bazargani and Kiliç (2021) argue that this sector is one of the main sectors of the world economy that contributes to employment, higher revenue level and promotion of economic prosperity. Sharpley (2020) highlighted the position of tourism sector in economic structure and concept of sustainable development based on the premise of economic O N L I N E F I R S T STRATEGIC MANAGEMENT, Vol. xx (20xx), No. x, pp. 0xx-0xx growth. Tourism is an important economic engine and enables socioeconomic development, generating employment opportunities (Usmani, Akram & Praveen, 2020).
The structure of this paper is as follows. After the introduction, there is a literature review which includes previous theoretical and empirical studies that have analysed profitability determinants in the tourism sector. The second part presents the characteristics and state of tourism sector in AP Vojvodina from the aspect of tourist arrivals, number of employees and financial performance of the observed firms. The third segment indicates data and methodology, and includes variables and econometric procedures for adequately created regression model. The last segment reports empirical results in terms of estimating the impact of internal factors on profitability in tourism sector of AP Vojvodina for the period 2015-2019.

Literature review
There are many empirical studies that have analysed profitability determinants in tourism sector (Agiomirgianakis, Magoutas & Sfakianakis, 2013;Ben Aissa & Goaied, 2016;Mijić & Jakšić, 2017;Alarussi & Alhaderi, 2018). Profitability is often measured by return on assets (Macas Nunes, Serrasqueiro & Sequeira, 2009;Stierwald, 2010;Skuflić & Mlinarić, 2015;Tan, 2017, Dimitrić et al., 2019. Agiomirgianakis et al. (2013) analysed the profitability of 134 hotels in Greece for the period 2006-2010. Their results identified size and leverage as two significant factors that have positive impact on profitability of firms in tourism sector. Ben Aissa and Goaied (2016) investigated 27 Tunisian hotels for the period 2000-2010 and their results showed positive relationship between efficiency and profitability for the observed period. Further, their analysis indicate that debt has positive impact on profitability, while size negatively affect the profitability measured by ROA. Mijić and Jakšić (2017) investigated the relationship between indebtedness and profitability for companies in the Republic of Serbia for the period 2009-2013. Their findings showed negative correlation between these variables. Alarussi and Alhaderi (2018) investigated 120 companies listed on Bursa Malaysia from 2012 to 2014. Their findings showed a strong positive relationship between size, company efficiency and profitability, as well as a negative relationship between debt to leverage ratio and profitability. Finally, variable liquidity has no significant impact on profitability of the analysed firms in Malaysia for the observed period. Lado-Sestayo, Otero-González, Vivel-Búa & Martorell-Cunill, (2016) showed that profitability depends largely on the market structure and the level of demand of the tourist destination. Further, Lado-Sestayo and Vivel-Búa (2018) identified that higher profitability of hotels depend on characteristics, location, competitive environment and tourist destination. Menicucci (2018) researched 2366 hotels in Italy for the period 2008-2016 and found that business model, ownership structure and financial structure affect the profitability. Also, factors such as size, location, accommodation and internationalization have positive impact on profitability level.

Characteristics and state of tourism sector in AP Vojvodina
Tourism industry in Serbia and region countries such as Croatia, Hungary, Romania and Slovenia reflect great interest in business tourism development (Kalaš, Mirović &Pavlović, 2019).
Bearing in mind that tourism development requires natural resources, sustained environment, cultural and historic heritage, Serbia has a chance to improve competitive tourism position on the world level by developing tourism products (Pavlović & Đeri, 2016). For example, Markus, Perovic, Pekovic &Popovic (2019) indicate that from the earliest stages of tourism development, sport-recreational activities have a great role and significance in creating and designing tourist services. On the other hand, Moric, Pekovic, Vukčević, Perović & Grisbeck (2021) highlighted the importance of cultural tourism and community engagement. Development model of AP Vojvodina should focus on (Provincial Secretariat for Economy and Tourism, 2018): a) agricultural production focused on high quality wine and other products with high added value in order to enable better position in tourism market at global level; b) develop brand elements, system of quality labels and protection mechanisms for all possible products in parallel; c) initiate urban rehabilitation and development of Novi Sad and other major urban centres of Vojvodina; d) improve the product of culture, presentation of cultural contents by applying modern technologies, and use national and EU funds; e) further develop the infrastructure and marketing of the navigable flows of the Danube, Sava, Tisa, Tamiš and canal network, because of their vitality for traffic access.  Analyzing the number of tourist arrivals according to the regional approach, it is noticeable that the largest number of tourists visited Belgrade (1258348) in 2019. The next region is Šumadija and Western Serbia with 1295685 tourists, while the lowest number of tourists visited Vojvodina in the observed year. After presenting the position of tourist sector at the national level, the research analyzes two sector in tourism of AP Vojvodina: sector 55 (accommodation) and sector 56 (serving and preparing food and beverages). Based on observed 3456 firms from tourism sector in AP Vojvodina, we can notice that sector 56 accounts for 3148 firms or 91.09% of the total number of firms in tourist sector.

Financial performance of tourism sector in AP Vojvodina
Profitability indicators are used to measure the ability of sale revenues and assets of the firms to achieve a positive business result. Profitability can be measured by gross profit margin, net profit margin, as well as return on assets and return on capital. Return on assets is an indicator of managerial efficiency that defines earning ability related to investment in total assets (Andrašić, Mijić, Mirović, & Kalaš, 2018).  Figure 4 shows a comparative overview of companies from sector 55 and companies from sector 56 from the aspect of average profitability level. As it can be seen, firms from sector 56 were more profitable with average ROA of 3.56% and average ROE of 1.93%. On the other hand, firms from sector 55 had lower average return on assets and return on capital during the observed period.

Methodology and data
This study analyses 3456 firms from tourist sector in AP Vojvodina from 2015 to 2019. The sample of tourist sector includes firms from sector 55 (accommodation) and firms from sector 56 (serving and preparing food and beverages) which have the obligation to disclose their financial statements publicly. The model can be presented as:

Empirical analysis and results
Before regression analysis, the study includes descriptive statistics of explanatory variables, as well as correlation analysis in order to determine the character and intensity of their relationship.  Table 3 shows descriptive analysis of selected variables (company size, sales revenues, earnings before interest and taxes, current liquidity, debt, financial stability and profitability) for 3456 firms from the tourism sector in AP Vojvodina. Based on descriptive analysis, we can see that observed companies are liquid, with average current liquidity ratio 1.95. Also, observed firms had mean profitability level of 3.4%, while average values of debt and financial stability are below 1. This means that these companies do not have problems with debt and financial stability.   Table 4 presents the correlation between explanatory variables for companies from the tourism sector in AP Vojvodina. The results of correlation analysis show a statistically significant relationship between internal factors such as firm size, sales revenue, EBIT, liquidity, debt and financial stability and profitability measured by return on assets. Analysing the character of their relationship, we can see that company size, sales revenue, EBIT and financial stability are positively correlated with profitability, while the relationship between liquidity, debt and profitability is negative.
The application of the model should reveal how internal factors affect the profitability of companies from the tourism sector in AP Vojvodina. In order to ensure adequate modelling, it is necessary to perform testing potential multicollinearity, heteroscedasticity and model specification. The results of multicolinearity, heteroscedasticity and model specification show that the presented model is adequately developed. The average value of VIF test is 1.21, which means that there is no problem of multicolinearity between selected variables. Also, the results of BP/CW test manifest that the null hypothesis about residual heteroscedasticity as well as the presence of a serial correlation between observed variables can be rejected. Finally, the results of the RR test demonstrate that regression model is properly specified since the value is above 0.05. The results of multiple regression model show that all explanatory variables, except variable FS, have a statistically significant impact on profitability of firms from the tourism sector in AP Vojvodina. Namely, variables SIZE, SR and EBIT have a positive effect on the ROA of observed firms, while CL and DBT negatively affect the profitability level measured by ROA. Analysing the intensity of the impact, the change in variables SIZE and DEBT leads to the largest change in ROA during the observed period. More O N L I N E F I R S T precisely, the growth of variable SIZE by 1% causes an increase in ROA by 0.23%, where higher level of debt by 1% leads to decrease in ROA by 0.26%. Further, the growth of variables such as SR and EBIT by 1% increase profitability by 0.11% and 0.01% respectively. On the other side, if firms increase liquidity level by 1%, their profitability will be smaller by 0.07%.

Conclusion
The subject of paper includes the analysis of tourist sector in AP Vojvodina for the period 2015-2019. The tourism sector covers sector 55 (accommodation) and sector 56 (servicing and preparing food, beverages) and includes 3456 firms. The sector 56 (accommodation) covers 3148 firms or 91.09% of the total number of observed firms, while sector 55 (servicing and preparing food and beverages) covers 308 firms or 8.91% of the total number of analysed firms. This research implies descriptive analysis of profitability of the observed firms during last five years. Also, correlation analysis and multiple regression are applied in order to identify potential relationship between internal factors and profitability, as well as their effects on business success. It can be noticed that firms from tourist sector were profitable, where average ROA was 1.81%. Further, the results revealed that firms from sector 56 were more profitable with average ROA of 3.56% and average ROE of 1.93%. The correlation analysis shows a statistically significant relationship between internal factors such as firm size, sales revenue, EBIT, liquidity, debt and financial stability and return on assets as a proxy for profitability. Results of multiple regression model show that growth of firm size by 1% increases profitability by 0.23%. Similarly, sales revenue and earnings before interest and taxes affect profitability positively. On the other hand, debt and liquidity have negative impact on profitability, where their growth by 1% decreases profitability by 0.26% and 0.07%. These results confirm interdependence between liquidity and profitability, where higher level of liquidity implies lower profitability. The contribution of this paper is to enable IT support to management of firms in tourism sector, whose internal factors are significant for profitability level in the tourism sector.SM