Financial Analysis as A Measure of Risk Management in Croatia's Hotel Industry

The purpose of this article is to examine the relative financial performance of the Croatian hotel industry and identify recent trends by combining fundamental financial analysis, descriptive statistics and trend analysis as measures of risk management. Based on the data aggregated from the Croatian Financial Agency (FINA) for the period of 2007-2017, cumulative financial statements are generated for the entire hotel industry. The findings of ratio analysis reveal that although hotel companies have experienced strong growth in real estate investments and capital reserves accumulation during the period, the overall hotel industry in Croatia is nevertheless highly leveraged, operationally inefficient, unprofitable and plagued with liquidity problems. Most of these issues can be attributed to the unfinished transition of select hotel companies to a free market economy. The study's results are relevant both for the scientific and the professional field, as empirical analyses of financial performance of the domestic hotel industry have been scarce to date. In that respect, this has been a first study of its sort conducted for the hotel industry in Croatia which addresses the lack of existing literature and is expected to provoke similar studies in the future.     Keywords: risk management, fundamental analysis, ratio analysis, hotels, Croati