The Impact of COVID-19 Pandemic Crisis on Profitability Ratio of Hotels and Resorts in Thailand
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Abstract
Hospitality businesses rely mainly on foreign tourists and are very important to the Thai economy. The COVID-19 has been inevitably affecting this business. This article aimed to 1) investigate the impact of the COVID-19 pandemic on the profitability ratio of hotel and resort businesses and 2) study the factors related to the nature of the business possibly affecting profitability ratios before and during the COVID-19 situation. The quantitative financial ratios analysis and profitability ratio were applied. The sample consisted of 115 hotels and resorts with sufficient informational financial statements for analysis from The Association of Domestic Travel of Thailand selected. The research instruments were 1) the past 3 years the financial statements from 2018 to 2019 - the years before the COVID-19 pandemic and 2020 – the year when COVID-19 had occurred and 2) the profitability ratio, which included the gross profit margin ratio, the operating profit to asset ratio, the return on assets ratio and the retained earnings to asset ratio. The descriptive statistics and the multiple linear regression analysis were used. The results showed that 1) the COVID-19 pandemic had a negative impact on the gross profit margin ratio, the operating profit to asset ratio and the return on assets ratio and 2) the positive impact of the nature of the business in terms of business size on the operating profit to asset ratio, the return on assets ratio and the retained earnings to assets ratio. The age of the business had a negative impact on the retained earnings to assets ratio. The knowledge gained from this research is the first to statistically confirm the impact of the COVID-19 pandemic on the profitability ratio of different sized hotels and resorts in Thailand.
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