Financial Management Challenges in the Hotel Sector: When Growth Does Not Generate Value

Abstract

The post-pandemic recovery of the hotel sector has been primarily associated with revenue growth; however, there is limited evidence on how this process translates into the generation of financial value. The aim of this study was to carry out a descriptive and exploratory financial analysis to examine how commercial growth translates into sustainable financial results in four-star hotels in the province of Imbabura, Ecuador, during the period 2019–2023. The research was carried out using a descriptive and exploratory financial analysis based on a ‘small-sample financial diagnostics’ approach, involving a longitudinal analysis of 45 firm-year observations (nine hotels × five years), compiled from complete and comparable public financial statements for the period 2019–2023. The data was organised by hotel and year, enabling an analysis of trends in operating revenue, the structure of costs and expenses, operating profit, net profit, net margin, and, as supplementary indicators, immediate liquidity, return on assets, and indebtedness. The results show that the recovery in revenue did not uniformly translate into an improvement in financial performance due to differences in operational structure and in the capacity to generate sustainable profits. As a contribution, the study proposes an integrated approach to financial diagnosis that broadens our understanding of the process by which commercial growth may or may not translate into the generation of sustainable financial value in emerging tourist destinations.

1. Introduction

Tourism is one of the strategic sectors for economic development in Latin America, playing a key role in generating employment, foreign exchange and regional revitalisation, particularly in areas where cultural, nature-based and community-based tourism has become a driver of economic growth [1]. Within this productive system, accommodation establishments have become increasingly important as they form the backbone of the tourism infrastructure; however, the financial sustainability of these businesses depends both on external factors—such as tourist demand, the economic climate and global crises—and on internal factors relating to operational efficiency, resource management and strategic investment decisions [2,3].

The COVID-19 pandemic posed one of the greatest challenges to financial management in the global hotel sector, causing an unprecedented decline in operating revenue whilst simultaneously disrupting the liquidity, investment capacity and financial stability of numerous companies. In the years that followed, the recovery of tourism enabled demand to gradually rebound; however, various studies agree that this recovery has not been uniform nor has it necessarily translated into a corresponding improvement in financial performance, due to persistent pressures on operating costs, rising running costs, accumulated financial obligations and new competitive demands arising from the post-pandemic landscape [4,5,6].

For this reason, financial sustainability takes on strategic importance as an essential dimension of organisational sustainability; from a financial management perspective, value creation does not depend solely on revenue growth but on organisations’ ability to transform that growth into sustainable economic results through the proper management of their operational structure, cost and expenditure control, the efficient use of resources, and the generation of profits from the core business activity [7]. Consequently, assessing revenue trends is insufficient unless one simultaneously analyses how these revenues are converted—or fail to be converted—into sustainable financial results that allow the hotel to maintain its economic capacity over time.

Recent literature on the hotel sector has focused much of its attention on analysing the economic impact of the pandemic, the recovery of tourism demand, business resilience and the performance of traditional financial indicators [8,9,10,11], however, there remains a knowledge gap regarding the process by which revenue recovery does or does not translate into sustainable financial value, understood as the capacity to sustain economic results over time [12]. In the Ecuadorian context, various studies have analysed the tourism sector from perspectives relating to economic impact, competitiveness, security and territorial development [13,14,15,16,17]. However, these studies have mainly focused on descriptive, comparative or project-specific evaluation approaches, with limited empirical evidence based on the financial analysis of hotel businesses using actual accounting data.

In particular, there are few studies that comprehensively analyse how the evolution of revenue, cost structures, expenses and profit quality influences the transformation of revenue into sustainable financial value, especially in emerging economies and in regional contexts where companies exhibit structural characteristics that differ from those observed in large international hotel chains [18].

Against this backdrop, a key question arises for financial management in the hotel sector: what challenges do hotel companies face in translating a recovery in revenue into the generation of sustainable financial value? Specifically, this study addresses the existing gap between the apparent revenue recovery and actual financial sustainability in emerging tourist destinations.

In light of this issue, the aim of this study is to carry out a descriptive and exploratory financial analysis of four-star hotels in the province of Imbabura (Ecuador) during the period 2019–2023 in order to examine how the evolution of operating revenue, cost structures, expenses and composition of profits are associated with the generation of sustainable financial value, supported by the complementary interpretation of key financial indicators.

Imbabura is regarded as an emerging tourist destination in Ecuador due to the relatively recent development of its tourism sector, the gradual diversification of its tourism products, and the growing visibility it has achieved through initiatives such as the UNESCO Global Geopark. However, the sector continues to be characterised by the predominance of small and medium-sized establishments and by structural constraints relating to access to finance and the availability of financial information—characteristics commonly found in emerging tourist destinations [18,19].

This study aims to contribute to the literature on financial sustainability in the hotel sector, broadening the perspective from revenue recovery to the process through which such recovery may or may not be transformed into sustainable financial value. To this end, it develops an exploratory and descriptive financial analysis that integrates a longitudinal analysis of operating revenue, costs, expenses, operating profit, net profit and complementary financial indicators. Unlike previous research that has focused on the isolated analysis of financial indicators or on estimating econometric relationships between variables, this study provides empirical evidence based on actual financial statements of hotels located in an emerging tourist destination. It also offers useful insights for managerial decision-making and the design of strategies aimed at strengthening the financial sustainability of hotel establishments in similar contexts.

2. Theoretical Framework

2.1. Financial Management and Value Creation in Hotel Businesses

Financial management is a strategic function of business administration aimed at planning, organising and controlling the use of economic resources with the aim of ensuring financial stability and contributing to the achievement of organisational objectives [20]. In this regard, it encompasses the set of decisions relating to the procurement, allocation and administration of financial resources; it seeks to optimise the use of available capital and ensure sustainable economic performance [7,21]. Its scope is not limited to the management of cash flows, but also incorporates aspects such as liquidity management, capital structure and cost efficiency—elements that determine the organisation’s ability to respond to the demands of the competitive environment [21,22,23,24].

Under this approach, value creation can be understood, from a corporate financial management perspective, as the organisation’s ability to transform economic growth into sustainable financial results [25], this implies that an increase in revenue is merely an initial condition for business performance, as value creation depends on how that revenue is managed through cost and expenditure control, operational efficiency and the ability to generate profits derived from the core business activity [26]. From this perspective, value creation is not limited to achieving higher sales levels, nor is it restricted to shareholder-oriented indicators; rather, it reflects the company’s ability to consolidate financial results that contribute to its sustainability and long-term survival.

In the hotel sector, this perspective takes on particular significance due to the specific characteristics of the industry, including the high proportion of fixed costs, the intensive use of assets, the seasonal nature of demand and high sensitivity to changes in the economic and tourism environment [27], conditions which mean that growth in demand or revenue does not necessarily guarantee an improvement in financial performance, as the ability to generate sustainable results depends on the efficiency with which the company’s operational structure is managed. In this regard, assessing the trends in revenue, costs, expenses and profits across the four-star hotels analysed in Imbabura provides a more comprehensive understanding of their financial performance and of the financial management challenges observed among the hotels analysed.

Consequently, in this study, value creation is approached from the perspective of corporate financial management, understood as the ability to transform revenue growth into sustainable financial results through the efficient management of the operational structure, rather than as a direct measure of the economic value generated for shareholders.

2.2. Financial Sustainability as the Foundation for Creating Business Value

Financial sustainability represents an organisation’s ability to maintain stable economic performance over time without compromising its operational continuity or its capacity to adapt to changes in the environment [28,29]. Unlike a view focused exclusively on short-term results, this approach considers that business growth only becomes meaningful when it can be sustained through a balanced financial structure and operations capable of generating recurring results [30]. Therefore, the analysis of financial performance requires moving beyond the isolated assessment of variables such as sales or profits for a given period and incorporating a comprehensive view of the factors that enable these results to be sustained in the long term.

Various studies suggest that financial sustainability does not depend solely on market behaviour, but also on the internal capabilities developed by organisations to respond efficiently to changing scenarios [31,32]. In this regard, companies exposed to similar economic conditions may exhibit very different financial performances due to the quality of their management processes, the efficiency with which they utilise resources, and their ability to adapt their operational structure to new competitive conditions; from this perspective, financial sustainability is a manifestation of an organisation’s capacity to preserve the company’s economic equilibrium, rather than the automatic result of commercial growth.

2.3. Financial Recovery of the Hotel Sector in the Post-Pandemic Context

The financial recovery of the hotel sector has evolved from a perspective centred on the restoration of demand towards an approach that takes into account businesses’ ability to rebuild their economic performance following the health crisis [33], whilst early post-pandemic studies used variables such as occupancy rates, tourist numbers and revenue to assess the sector’s recovery, more recent research argues that these indicators merely describe the recovery of commercial activity but are insufficient to explain the true financial recovery of businesses [34,35,36].

Empirical evidence shows that many hotel companies managed to recover and even exceed the revenue levels recorded before the pandemic; however, this trend did not necessarily translate into an equivalent recovery in profitability [37]. Persistent inflationary pressures, rising labour costs, higher energy prices, increased supply costs and investments made to accelerate digital transformation and improve service standards significantly altered the sector’s cost structure [38]; as a result, improved revenue often coexisted with narrower profit margins and greater pressure on operational efficiency. These results suggests that revenue recovery is a necessary but insufficient condition for strengthening financial performance, as the ability to translate revenue growth into sustainable financial results depends on decisions relating to operational structure and the efficient management of resources.

In this regard, recent studies measure liquidity, indebtedness and profitability, but do not reconstruct the sequence by which sales, cost structure and margins do or do not translate into sustainable profit [39,40,41], this gap persists because early studies relied on aggregate demand indicators and recovery scenarios, whilst detailed accounting analyses emerged later and remain less common [35,37]. This limitation is particularly evident in emerging economies, where the structural characteristics of the sector differ from those observed in major international tourism markets.

Consequently, the recent literature is beginning to shift the focus from measuring growth to analysing the conditions that enable that growth to be consolidated into sustainable financial results [33]. This shift involves recognising that companies operating in the same economic context may exhibit very different financial performances as a result of decisions relating to cost management, expenditure structure, asset utilisation and the efficiency of financial management [4]; therefore, understanding the financial recovery of the hotel sector requires analysing not only revenue trends, but also the way in which the cost and expenditure structure influences profit generation and the ability to transform commercial growth into sustainable financial results.

2.4. Transforming Revenue Growth into Financial Value Creation

The literature agrees that sales growth is a key factor in the creation of corporate value; however, its contribution depends on the organisation’s ability to transform that growth into higher margins, a more efficient use of resources and sustainable profits, rather than simply an increase in revenue volume [25]. In this regard, increased sales represent a means of strengthening value creation provided they are accompanied by improvements in margins and in the efficiency of invested capital [42]. Furthermore, the evidence shows that efficient control of costs and expenses plays a decisive role by directly influencing profitability, cash flow generation and the economic performance of organisations [43,44]. Furthermore, value creation is also often assessed using financial indicators relating to profitability, liquidity and indebtedness, which enable an assessment of the company’s ability to sustain its financial performance over time [45,46]; interpreting these indicators requires a comprehensive analysis to properly understand the company’s financial performance [47].

In this regard, value creation is not an immediate result of commercial growth, but rather the outcome of a process of financial transformation in which revenue passes through various stages before becoming sustainable financial results. During this process, sales growth is influenced by the structure of costs and expenses, operational efficiency and the organisation’s ability to generate profits from its core business. Therefore, value creation should be understood as the result of a sequence of interdependent financial decisions and not as an automatic consequence of increased demand.

As an expression of this process, operating profit, net profit and financial margins enable an assessment of the organisation’s ability to generate consistent results. The literature on earnings quality maintains that profits reflect greater financial strength when they stem primarily from operating activities and are sustainable over time, whilst reliance on extraordinary income can distort the interpretation of economic performance [48]. Consequently, understanding the generation of financial value requires an integrated analysis of the evolution of revenue, the structure of costs and expenses, and profits, to understand why some companies manage to transform sales growth into sustainable financial results, while others do not.

2.5. Complementary Financial Indicators for Assessing Financial Sustainability

Although the transformation of operating revenue into sustainable financial results constitutes the central focus of financial diagnosis, a comprehensive assessment of financial performance also requires the use of complementary financial indicators. In the hotel sector, financial performance is commonly evaluated using indicators that reflect different dimensions of an organisation’s financial condition, particularly liquidity, indebtedness and profitability [49,50,51,52]. Among the most frequently employed measures are the quick ratio, which assesses the ability to meet short-term obligations; the debt ratio, which reflects the degree of financial leverage; and return on assets (ROA) together with net margin, which provide complementary information on the efficiency with which financial resources are converted into economic results [52,53,54].

These indicators do not replace the analysis of operating revenue, costs, expenses and profits; rather, they complement it by providing a broader understanding of the financial position and performance of hotel businesses. In an industry characterised by high demand volatility, intensive asset utilisation and significant fixed costs, the combined interpretation of these indicators contributes to a more comprehensive assessment of financial sustainability and supports managerial decision-making in dynamic operating environments [55].

2.6. Theoretical Foundations

Financial Management Theory forms the main conceptual framework for this research, as it establishes that the objective of financial management is to allocate resources efficiently in order to maintain a balance between profitability, liquidity and risk, thereby promoting the organisation’s economic sustainability [22,23,24]. From this perspective, financial performance depends not only on revenue growth, but also on the ability to manage costs, expenses and available resources in a way that enables the generation of sustainable profits. Consequently, this theory underpins the analysis of trends in operating revenue, costs, expenses, operating profit, net profit and financial indicators, which are considered in this study as measures of financial management performance.

Value-Based Management (VBM) posits that the creation of corporate value is influenced by various financial drivers, including revenue growth, profit margins, operational efficiency and resource utilisation [56,57]. However, this study adopts this perspective from the standpoint of corporate financial management rather than shareholder value. In this context, value creation is understood as the firm’s ability to transform business growth into sustainable financial results. Accordingly, this theory provides the conceptual basis for analysing how changes in revenue, cost and expense structures, and profitability contribute to or constrain the generation of sustainable financial value in hotel companies.

Dynamic Capabilities Theory complements the financial interpretation of this study by providing a theoretical perspective to understand why hotel firms exposed to the same post-pandemic environment may exhibit heterogeneous financial trajectories. According to Teece [32], organizations differ in their ability to sense changes, seize opportunities, and reconfigure resources in response to environmental disruptions. Although these capabilities are not directly measured in this research, the theory provides an appropriate interpretative framework for understanding why the hotels analysed showed different trajectories in operating revenue, profits and complementary financial indicators over the study period.

Financial Management Theory constitutes the primary theoretical foundation of this study because it explains how financial resources are managed and how financial performance is generated. Value-Based Management complements this perspective by explaining how financial performance is translated into sustainable value creation, and, Dynamic Capabilities Theory is incorporated as an interpretative framework to explain why hotels operating under the same post-pandemic conditions exhibited different financial trajectories, offering an interpretative perspective on the observed differences in their ability to adapt and reconfigure operational resources. Therefore, Dynamic Capabilities Theory is not used as a directly tested explanatory model but as a theoretical lens through which the observed heterogeneous financial trajectories are interpreted.

3. Materials and Methods

The study adopted a quantitative approach with an exploratory and descriptive scope, using a non-experimental longitudinal research design based on publicly available financial statements from nine four-star hotels located in Imbabura Province, Ecuador, covering the period 2019–2023. The financial analysis aimed to provide an exploratory financial diagnosis of operating revenue, operating costs, operating expenses, operating profit, net profit and complementary financial indicators.

The application of this design is particularly relevant in emerging tourist destinations, where the financial analysis of tourism enterprises faces limitations associated with the limited availability of accounting information and the small number of enterprises that report complete financial statements. Under these conditions, previous studies have adopted exploratory financial analyses and multiple-case approaches to examine the financial evolution of comparable organisations using detailed accounting information [58,59].

In tourism research, financial diagnosis has been used as an exploratory approach to obtain an in-depth understanding of organisations’ economic performance through the analysis of financial statements and financial indicators [60]. Furthermore, exploratory financial diagnoses provide a detailed assessment of financial performance and facilitate the identification of financial trends and organisational characteristics without seeking statistical generalisation beyond the cases analysed [61].

The initial population comprised accommodation establishments formally registered in the National Register of Tourist Establishments maintained by the Ecuadorian Ministry of Tourism for Imbabura Province. The availability of publicly accessible financial statements was subsequently verified through the records of the Ecuadorian Superintendency of Companies. Because four-star hotels constituted the largest group of establishments with publicly available financial information and shared similar operational characteristics, this category was selected to ensure greater comparability among the cases analysed.

Among the 23 four-star hotels identified, only nine had complete and consistent financial statements with disaggregation of accounting items throughout the period 2019–2023. These hotels constituted the final sample analysed.

The inclusion criteria were (i) the availability of complete and continuous balance sheets and income statements for the period 2019–2023 and (ii) disaggregation of accounting.

All establishments that met the inclusion criteria were included in the analysis. No additional exclusion criteria were applied, as the objective was to provide a descriptive and exploratory financial diagnosis based on all hotels with complete and comparable financial information for the period 2019–2023.

Table 1 presents the characteristics of the sample of selected hotels. To protect confidentiality, the establishments are identified by codes (H1–H10), indicating only their category and approximate location.

Table 1. Characteristics of the hotels selected for the sample.

Code	Official Category (Ministry of Tourism)	Approximate Location (Canton)
H1	4-star	Ibarra
H2	4-star	Urcuquí
H3	4-star	Ibarra
H4	4-star	Ibarra
H5	4-star	Ibarra
H6	4-star	Ibarra
H7	4-star	Otavalo
H8	4-star	Otavalo
H9	4-star	Ibarra
H10	4-star	Ibarra

Source: Authors’ own elaboration.

Although the sample is not intended to be statistically representative of all hotel establishments in the province of Imbabura, it included all four-star hotels that met the predefined inclusion criteria. This selection was based on methodological criteria designed to ensure comparability over time and the consistency of the financial analysis; therefore, the results should be interpreted exclusively in the context of the establishments analysed.

Data Collection and Processing

Financial information was obtained from the balance sheets and income statements of each hotel for the period 2019–2023, which were publicly available through the records of the Ecuadorian Superintendency of Companies, Securities and Insurance. Once the financial information had been collected, the accounting data from the financial statements were recorded and organised by hotel and by year in a structured Microsoft Excel for Microsoft 365 (Version 2206; Microsoft Corporation, Redmond, WA, USA) database. During this process, the information entered into the database was systematically cross-checked against the original financial statements to verify its accuracy and ensure consistency with the published accounting records.

The financial data were analysed using descriptive financial analysis based on the longitudinal database. Initially, horizontal analysis was applied to examine the annual evolution of the hotels’ operating revenue over the period 2019–2023. Subsequently, vertical analysis was applied by expressing operating costs, operating expenses, operating profit and net profit as a percentage of operating revenue. This procedure enabled the analysis of the composition of operating revenue and facilitated comparisons of the relative contribution of each financial component across the hotels and throughout the study period.

The results of the financial analysis are presented at the aggregated hotel-year level for the main operating accounts, including operating revenue, operating costs and operating expenses. For analytical purposes, operating costs were examined excluding the depreciation component when it had been recorded within operating costs, in order to facilitate the interpretation of the operating resources directly associated with service provision. Operating profit and net profit are also analysed at the aggregated level for all hotels. However, when operating losses coexisted with positive net profit, the corresponding hotel-year observations were examined at a more disaggregated level by analysing the non-operating accounts recognised after operating profit, including non-operating income, finance costs and other non-operating expenses, to assess the quality of earnings and explain the reconciliation between operating profit and net profit.

To complement the financial diagnosis, the quick ratio, return on assets (ROA) and the debt ratio were calculated using the accounting information reported in the balance sheets and income statements. These indicators were incorporated to provide additional information on the liquidity, profitability and financial structure of the hotels analysed.

The methodological design was conceptually grounded in three complementary theoretical perspectives. Financial Management Theory provided the principal conceptual foundation for the financial diagnosis and for the selection of the financial analysis techniques used to evaluate organisational financial performance. Value-Based Management informed the analytical sequence by guiding the examination of the financial process through which operating revenue may or may not be translated into operating profit, net profit and, ultimately, sustainable financial value. Finally, Dynamic Capabilities Theory was not operationalised as a measurable construct but was adopted solely as an interpretative framework for understanding the heterogeneous financial trajectories observed among the hotels analysed during the post-pandemic recovery. Accordingly, the findings were interpreted in light of these complementary theoretical perspectives to provide a theoretically informed explanation of the financial patterns observed across the hotels analysed.

The financial analysis techniques used in the research are described below:

i.

Horizontal analysis was applied to operating revenue to calculate the percentage change between consecutive years over the period 2019–2023. This technique measures the year-on-year variation of a financial item, facilitating the assessment of its evolution over time.

$${\Delta }_{\mathrm{t}}={\displaystyle \frac{{(X}_t{-X}_{t-1})}{X_{t-1}}}\times 100$$

where $X_t$ represents the value of the financial item in year t and X_t−1 the value for the immediately preceding year

ii.

Vertical analysis expresses each selected financial item as a percentage of operating revenue for the same accounting period. This technique facilitates the comparison of the relative contribution of operating costs, operating expenses, operating profit and net profit across hotels and over time.

$${AV}_{i,t}={\displaystyle \frac{X_{i,t}}{{Revenue}_t}}\times 100$$

where $X_{i.t}$ represents the value of financial item i for the hotel under analysis in year t, expressed as a percentage of operating revenue for the same period, whilst operating revenue serves as the benchmark for expressing the relative share of each item within the structure of the profit and loss account.

iii.

Financial indicators to complement the financial analysis, liquidity, debt and profitability ratios were calculated for each of the hotels analysed over the period 2019–2023 (Table 2). These indicators helped to strengthen the interpretation of the observed financial performance and to assess the establishments’ ability to sustain their economic performance from a comprehensive perspective [6,62,63,64,65,66,67].

Table 2. Financial indicators.

Indicator	Formula	Main Interpretation
Immediate Liquidity Ratio(LI)	Cash and cash equivalents/Current Liabilities	Immediate payment capacity considering liquid assets.
Return on Assets (ROA)	Net Profit/Total Assets	Efficiency in the use of assets to generate profit.
Debt Ratio (END)	Total Liabilities/Total Assets	Degree of financial leverage

Source: Authors’ own elaboration.

4. Results

4.1. Trends in Operating Revenue: A Mixed Recovery in Business

Table 3 shows the trends in operating revenue for the nine hotels analysed over the period 2019–2023. The results show that the pandemic led to a widespread contraction in business activity in 2020, with no establishment managing to maintain the revenue levels recorded in 2019. The decline ranged from 15 per cent to 68 per cent, with Hotel 2 (−68 per cent) and Hotel 7 (−66 per cent) being the hardest hit, whilst Hotel 4 (−15 per cent) and Hotel 8 (−31 per cent) experienced the smallest decreases. These results show that the initial impact of the pandemic affected all the hotels analysed, albeit to varying degrees.

Table 3. Trend in operating revenue for four-star hotels in Imbabura (2019–2023).

	2019	2020	2021	2022	2023
H1	$632,644.11	$280,000.13	$395,239.19	$521,028.30	$619,444.28
H2	$2,032,333.47	$648,095.96	$544,556.39	$1,383,515.29	$1,359,550.77
H3	$1,393,211.47	$500,164.93	$834,838.71	$1,490,236.97	$1,902,172.02
H4	$130,007.30	$110,280.05	$185,568.81	$172,765.20	$254,853.63
H5	$1,270,235.82	$504,416.94	$964,510.12	$1,258,888.05	$1,304,934.41
H6	$226,962.97	$92,169.40	$100,082.82	$190,464.17	$250,038.73
H7	$141,857.96	$48,905.55	$51,746.31	$111,719.33	$153,059.83
H8	$1,331,962.57	$913,845.37	$1,504,669.01	$1,602,002.94	$1,603,051.67
H9	$356,096.16	$198,640.04	$280,828.58	$334,168.75	$397,940.40

Source: Authors’ own elaboration.

From 2021 onwards, a recovery in operating revenue can be observed; however, this recovery followed different trajectories across establishments. Some hotels recorded stronger recoveries in operating revenue immediately after the pandemic, such as Hotel 5 (91 per cent), Hotel 7 (116 per cent) and Hotel 2 (154 per cent in 2022), whilst others showed a slower and more gradual recovery, such as Hotel 6, which saw growth of just 9 per cent in 2021. These differences suggest that the recovery in operating revenue was not uniform across the hotels analysed but instead reflected the specific circumstances of each establishment.

During 2022 and 2023, revenue growth tended to moderate; Table 4 shows that although most hotels continued to increase their sales, growth rates were considerably lower than those observed immediately after the pandemic, and some establishments even recorded slight decreases compared with the previous year, as was the case with Hotel 2 (−2 per cent in 2023).

Table 4. Year-on-year percentage change in operating revenue (%).

	2020/2019	2021/2020	2022/2021	2023/2022
H1	−56%	41%	32%	19%
H2	−68%	−16%	154%	−2%
H3	−64%	67%	79%	28%
H4	−15%	68%	−7%	48%
H5	−60%	91%	31%	4%
H6	−59%	9%	90%	31%
H7	−66%	6%	116%	37%
H8	−31%	65%	6%	0%
H9	−44%	41%	19%	19%

Source: Authors’ own elaboration.

Based on the long-term trend in operating revenue, the hotels analysed were descriptively classified into three groups according to their revenue growth during the study period, as shown in Table 5. A first group, comprising Hotels 3, 5 and 7, showed a rapid recovery, characterised by sustained increases in revenue following the crisis. A second group, comprising Hotels 1, 8 and 9, showed a gradual recovery, with more moderate but consistent growth. Finally, Hotels 2, 4 and 6 showed an irregular recovery, reflecting significant fluctuations from year to year and a less stable trajectory. This descriptive classification suggests that operating revenue evolved differently across the hotels analysed and that higher sales growth did not necessarily translate into a homogeneous financial recovery.

Table 5. Descriptive classification of hotels according to operating revenue growth (2019–2023).

Profile	Hotels	Features
Rapid recovery growth	H3, H5, H7	They are rapidly exceeding post-pandemic levels through sustained growth.
Gradual recovery growth	H1, H8, H9	They are showing steady increases, albeit of a smaller magnitude.
Uneven recovery growth	H2, H4, H6	They are showing significant fluctuations from year to year and a less stable recovery process.

Source: Authors’ own elaboration.

4.2. The Operational Structure as a Determining Factor in the Generation of Financial Value

A recovery in revenue does not, in itself, guarantee an improvement in financial performance; it is therefore necessary to analyse the operational structure of hotels, assessing the proportion of costs and expenses relative to operating revenue. Analysing these components makes it possible to assess whether the increase in operating revenue was accompanied by changes in the composition of operating costs and operating expenses or whether it was offset by a greater absorption of revenue by these components. Table 6 presents these results for the period 2019–2023.

Table 6. Breakdown of operating costs and expenses as a proportion of operating revenue for four-star hotels in Imbabura (2019–2023).

		2019	2020	2021	2022	2023	Observed Behaviour
H1	Operating cost	73%	101%	68%	64%	71%	High combined absorption of costs and expenses.
	Operating expense	30%	46%	36%	33%	32%
H2	Operating cost	86%	93%	97%	89%	84%	Predominance of operating costs
	Operating expense	9%	23%	19%	12%	15%
H3	Operating cost	51%	53%	45%	51%	55%	Better relative balance between costs and expenses.
	Operating expense	42%	57%	38%	26%	24%
H4	Operating cost	97%	71%	84%	15%	14%	Shift in the operating mix from costs towards expenses.
	Operating expense	9%	25%	6%	65%	84%
H5	Operating cost	15%	15%	16%	25%	16%	Predominance of operating expenses.
	Operating expense	76%	136%	69%	65%	76%
H6	Operating cost	52%	42%	27%	19%	22%	Higher relative weight of operating expenses
	Operating expense	42%	136%	65%	84%	78%
H7	Operating cost	58%	79%	30%	71%	76%	The operating structure is volatile.
	Operating expense	50%	72%	77%	19%	21%
H8	Operating cost	80%	71%	73%	87%	74%	Predominance of operating costs
	Operating expense	10%	15%	4%	0,3%	12%
H9	Operating cost	54%	49%	62%	77%	67%	High combined absorption.
	Operating expense	32%	34%	30%	32%	23%

Source: Authors’ own elaboration.

The results show considerable differences in the composition of operating costs and expenses across the hotels analysed. In some establishments, operating costs consistently represented the largest proportion of operating revenue, whereas in others, operating expenses accounted for a greater share. Certain hotels also showed substantial year-to-year changes in the relative weight of costs and expenses. Taken together, these differences suggest that growth in operating revenue was not consistently accompanied by a comparable improvement in operating results across the hotels analysed.

The combined assessment of operating costs and expenses revealed several forms of cost and expense composition among the hotels analysed. These observed differences help to interpret why increases in operating revenue were accompanied by different developments in operating profit across the establishments.

(a)

Dominance of operating costs: This includes Hotels 2, 7 and 8.

In these establishments, operating costs represented the largest proportion of operating revenue during most of the period analysed. In Hotels 2 and 8, this predominance was observed consistently throughout the study period. Although Hotel 7 recorded a higher proportion of operating expenses than operating costs in 2021, operating costs remained the predominant component in the remaining years. Overall, the high proportion of operating costs reduced the revenue available to cover operating expenses and contributed to more limited operating profit generation.

(b)

Higher relative weight of operating expenses: Hotels 4, 5 and 6

This group includes Hotels 4, 5 and 6. Hotels 5 and 6 consistently allocated a relatively large proportion of operating revenue to operating expenses throughout most of the study period. Hotel 4 showed a different evolution, with operating costs predominating until 2021 and operating expenses becoming the largest component from 2022 onwards. In these establishments, operating expenses represented a substantial share of operating revenue during the years in which they predominated. These results suggest that lower operating costs were not consistently accompanied by proportional improvements in operating profit.

(c)

High combined absorption: Hotels 1 and 9 showed a high combined proportion of operating costs and expenses relative to operating revenue. As a result, a relatively small proportion of operating revenue remained available to generate operating profit.

(d)

Relatively balanced structure: Hotel 3 showed the most balanced composition of operating costs and expenses among the hotels analysed, with operating costs remaining relatively stable (45–55 per cent of operating revenue) and operating expenses gradually declining from 42 per cent to 24 per cent. Despite this more balanced composition, the hotel recorded a net margin of 5.5 per cent in 2023, suggesting that a more balanced cost and expense structure alone was not consistently associated with higher net margins.

Overall, the descriptive classification shows that hotels experiencing similar changes in operating revenue did not necessarily exhibit similar cost and expense compositions. These observed differences provide the basis for the following analysis of operating profit, net profit and net margin, allowing an assessment of how different cost and expense compositions were reflected in the financial results of the hotels analysed.

4.3. Operating Profit vs. Net Profit

The recovery in operating revenue and the changes observed in the structure of operating costs and operating expenses can be further examined through operating profit and net profit. In this context, operating profit provides insight into the hotels’ ability to generate results from their core business activities, whereas net profit reflects the combined effects of operating performance together with non-operating income and expenses. Table 7 shows the trend in both figures over the period 2019–2023.

Table 7. Operating profit and net profit of the hotels analysed (2019–2023).

		2019	2020	2021	2022	2023
H1	Operating profit	−$84,354.32	−$198,647.56	−$74,750.97	−$22,940.09	−$90,462.26
	Net profit	−$74,236.52	−$129,310.84	−$65,481.20	$7949.81	−$95,962.44
H2	Operating profit	$89,053.11	−$110,159.50	−$93,621.94	−$17,167.81	$9787.18
	Net profit	$48,269.12	−$113,635.31	−$82,038.61	−$24,212.37	$2407.76
H3	Operating profit	$48,353.73	−$103,973.02	$61,275.53	$266,399.55	$290,332.16
	Net profit	$18,014.87	−$53,698.64	−$7993.92	$132,153.94	$104,553.06
H4	Operating profit	−$26,853.46	$325.09	$631.43	$34,983.02	$5144.92
	Net profit	−$47,282.32	$683.31	$494.34	−$765.63	$2578.84
H5	Operating profit	$112,919.38	−$259,312.32	$145,538.64	$118,169.55	$96,921.53
	Net profit	$66,958.25	−$269,423.22	$72,380.45	$57,509.79	$21,838.29
H6	Operating profit	−$987.79	−$131,150.42	$8152.49	−$6241.76	−$105.75
	Net profit	−$4851.70	−$134,740.41	$4027.18	$1174.09	$2815.82
H7	Operating profit	−$11,910.39	−$25,245.59	−$3551.01	$5023.78	$4864.80
	Net profit	−$4083.48	−$7998.78	$1796.66	$4009.51	$736.19
H8	Operating profit	$27,254.71	$44,406.23	$268,503.41	$117,218.70	$130,029.35
	Net profit	−$5011.07	$28,851.77	$141,362.65	$74,564.70	$33,541.32
H9	Operating profit	$7625.69	−$7245.50	−$15,692.29	−$29,507.49	−$2396.11
	Net profit	−$20,817.67	−$20,836.79	−$35,747.16	−$77,355.47	−$8429.07

Source: Authors’ own elaboration. Values are expressed in US dollars.

Based on the longitudinal analysis, four descriptive recovery trajectories were identified according to the evolution of operating profit and net profit during the study period. These trajectories illustrate the heterogeneous financial recovery observed among the hotels analysed following the pandemic.

• Group I. Relative recovery in operating profit, but with limited conversion of growth into net profit

Hotels 3 and 8 recorded comparatively favourable operating profit and net profit outcomes within the group analysed, although their trajectories differed over the study period. Hotel 3 moved from an operating loss of USD 103,973.02 in 2020 to positive operating profit from 2021 onwards, reaching USD 290,332.16 in 2023. Its net profit also returned to positive values in 2022 and remained positive in 2023, although it declined from USD 132,153.94 to USD 104,553.06 during the final year.

Hotel 8 maintained positive operating profit throughout the entire period. Operating profit reached its highest value in 2021, at USD 268,503.41, declined in 2022 and increased moderately to USD 130,029.35 in 2023. Net profit became positive in 2020 and also peaked in 2021, but subsequently declined to USD 74,564.70 in 2022 and USD 33,541.32 in 2023. Taken together, these results show that both hotels ended the study period with positive operating profit and net profit, although the evolution of their results was not uniform.

• Group II. Partial recovery of financial results

Hotel 5 recorded positive operating profit and net profit in 2019, followed by operating and net losses in 2020. Both measures recovered in 2021 and remained positive throughout the remainder of the study period. However, operating profit and net profit declined steadily between 2021 and 2023. Operating profit decreased from USD 145,538.64 in 2021 to USD 96,921.53 in 2023, whilst net profit fell from USD 72,380.45 to USD 21,838.29 over the same period. These results show that, although the hotel recovered positive financial results after the pandemic, the improvement weakened during the subsequent years.

Hotel 2 also recorded positive operating profit and net profit in 2019, but both measures became negative in 2020 and remained negative until 2022. In 2023, operating profit (USD 9787.18) and net profit (USD 2407.76) returned to positive values. Nevertheless, both measures remained well below their pre-pandemic levels, indicating only a partial recovery by the end of the study period.

• Group III. Irregular and unstable financial recovery

Hotel 4 moved from an operating loss in 2019 to positive operating profit from 2020 onwards. Operating profit remained modest in 2020 and 2021, increased substantially in 2022 and declined again in 2023. Net profit followed a more irregular trajectory, returning to positive values in 2020 and 2021, becoming negative again in 2022 and recovering to a positive value in 2023. Overall, the financial results varied across the study period without showing a consistent behavior of improvement.

Hotel 6 alternated between operating profits and losses throughout the study period. Operating profit became positive only in 2021 and returned to negative values in 2022 and 2023. Net profit followed a different trajectory, remaining negative in 2019 and 2020 before becoming positive from 2021 onwards. The coexistence of negative operating profit and positive net profit in 2022 and 2023 is examined in greater detail in the following section through the reconciliation between operating profit and net profit.

Hotel 7 reported operating losses between 2019 and 2021 before returning to positive operating profit in 2022 and maintaining a positive result in 2023. Net profit became positive in 2021 and remained positive during the final three years of the study, although it declined from USD 4009.51 in 2022 to USD 736.19 in 2023. These results indicate an improvement in financial results towards the end of the study period, although the magnitude of net profit decreased in the final year.

Hotels 4, 6 and 7 exhibited irregular trajectories in operating profit and net profit over the study period. Although all three hotels reported positive financial results in some years, the timing and evolution of these results differed across establishments.

• Group IV. Persistent losses

Hotel 1 recorded operating losses throughout the study period. Net profit also remained negative in every year except 2022, when a positive value of USD 7949.81 was recorded despite the persistence of an operating loss. In 2023, both operating profit and net profit returned to larger negative values. Overall, the financial results do not suggest a sustained improvement over the study period.

Hotel 9 reported negative net profit throughout the study period. Operating profit was positive only in 2019 and became negative from 2020 onwards. Although both operating loss and net loss decreased in 2023 compared with the previous year, both measures remained negative at the end of the study period.

Taken together, these results show that the recovery in operating profit and net profit was slower and more uneven than the recovery in operating revenue. Although several hotels returned to positive operating profit and net profit by the end of the study period, the trajectories differed considerably across establishments. Some hotels showed more sustained positive results, whereas others experienced irregular recoveries or continued to report losses. These findings suggest that increases in operating revenue did not consistently translate into improved financial results across the hotels analysed and reinforce the importance of analysing both the structure of operating costs and operating expenses and the quality of profits together.

4.4. Quality of Earnings and Sustainability of Financial Results

In addition to the differences observed in the recovery trajectories, some hotel-year observations showed positive net profit despite reporting operating losses. This situation was identified in three hotels during specific years of the study period: Hotel 1 in 2022, Hotel 6 in 2022 and 2023, and Hotel 7 in 2023. To facilitate the interpretation of these cases, Table 8 presents a reconciliation between operating profit and net profit by disaggregating the non-operating items recognised after operating profit in the corresponding financial statements. This breakdown allows the contribution of non-operating revenue, finance costs and other non-operating expenses to the final profit or loss for the financial year to be examined.

Table 8. Between operating profit and net profit in hotels with operating losses and positive net profit.

	H1	H6		H7
	2022	2022	2023	2023
Operating profit	−$22,940.09	−$6241.76	−$105.75	−$3551.01
Non-Operating Revenue	$66,197.05	$15,173.54	$10,446.43	$7934.04
Finance costs	$35,307.15	$3215.52	$3726.58	$1294.93
Other non-operating expenses	$0.00	$911.13	$0.00	$0.00
Profit/Loss before tax	$7949.81	$4805.13	$6614.10	$3088.10
Employee profit-sharing	$0.00	$720.77	$992.12	$544.96
Taxes	$0.00	$2910.27	$3798.28	$746.48
Profit/Loss for the financial year	$7949.81	$1174.09	$2815.82	$1796.66

Source: Authors’ own elaboration. The table includes only those hotels and periods in which a positive net profit was recorded despite operating losses. Its purpose is to illustrate the reconciliation between operating profit and net profit through the items recognised after operating profit.

The reconciliation presented in Table 8 shows that, for Hotels 1 (2022), 6 (2022 and 2023) and 7 (2021), operating losses were offset by the combined effect of the items recognised after operating profit. In all three cases, other non-operating income constituted the main offsetting component, whilst finance costs, other non-operating expenses and the tax charge adjusted the result to arrive at the net profit for the financial year. These findings suggest a disconnect between core operating performance and reported net results. When non-operating income recognised after operating profit becomes the primary source of positive net profit, the reported financial result may not fully reflect the hotel’s underlying financial sustainability, as it is not supported by operating performance.

In the cases analysed, the generation of positive results was not exclusively linked to an improvement in operational efficiency, but also to the impact of non-operating items. These findings suggest that financial recovery should be assessed beyond net profit for the financial year, since sustainable financial value is more consistently supported by results generated through core hotel operations than by non-operating income.

4.5. Trends in Net Margin and Financial Value Creation

The longitudinal evolution of operating revenue, the structure of operating costs and operating expenses, and the resulting financial outcomes ultimately converge in the net margin, an indicator that expresses the proportion of operating revenue retained as net profit after accounting for all costs, expenses and other items recognised during the financial year. Accordingly, the analysis of the net margin provides a complementary perspective for examining the extent to which the recovery in operating revenue during the 2019–2023 period was reflected in net profit. Table 9 presents the longitudinal evolution of the net margin for the hotels analysed.

Table 9. Trends in hotels’ net profit margin (2019–2023).

	2019	2020	2021	2022	2023
H1	−12%	−46%	−17%	2%	−15%
H2	2%	−18%	−15%	−2%	0%
H3	1%	−11%	−1%	9%	5%
H4	−36%	1%	0%	0%	1%
H5	5%	−53%	8%	5%	2%
H6	−2%	−146%	4%	1%	1%
H7	−3%	−16%	3%	4%	0%
H8	0%	3%	9%	5%	2%
H9	−6%	−10%	−13%	−23%	−2%

Source: Authors’ own elaboration.

The results show that the recovery in net margin was considerably slower than the recovery in operating revenue. Although most hotels increased their operating revenue following the pandemic, only one establishment (Hotel 3) achieved a net margin of 5% in 2023, whilst six hotels recorded net margins between 0% and 2%, and two continued to report negative margins. These findings suggest that increases in operating revenue were not consistently reflected in higher net margins across the hotels analysed, indicating limitations in the conversion of operating revenue growth into sustainable financial value.

Even among the relatively better-performing hotels, net margins remained comparatively low. Hotel 3 recorded the highest net margin in the sample (5%), followed by Hotel 8 (2%). These findings suggest that recovering operating revenue alone was not sufficient to generate stronger net margins, highlighting the importance of improving the conversion of operating revenue growth into sustainable financial results.

Overall, the results suggest that the recovery in operating revenue was not consistently accompanied by corresponding improvements in net profit and net margin. The differences observed in the structure of operating costs and operating expenses, together with the quality of profits, suggest that financial recovery followed different trajectories across the hotels analysed.

4.6. Supplementary Financial Indicators

To complement the financial analysis, supplementary financial indicators relating to immediate liquidity, return on assets (ROA) and indebtedness were analysed (Table 10, Table 11 and Table 12). These indicators provide additional evidence for interpreting the financial position of the hotels and complement the analysis of operating revenue, the structure of operating costs and operating expenses, operating profit, net profit and net margin, thereby providing a more comprehensive assessment of the financial recovery observed during the study period.

Table 10. Immediate liquidity of the hotels analysed (2019–2023).

	2019	2020	2021	2022	2023
H1	0.09	0.11	0.22	0.16	0.08
H2	0.21	0.00	0.09	0.09	0.06
H3	0.03	0.09	0.30	0.09	0.05
H4	0.00	0.00	0.18	0.93	0.49
H5	3.78	2.75	2.10	0.51	0.37
H6	0.61	0.02	0.29	0.15	0.13
H7	1.42	0.89	2.61	3.65	1.15
H8	0.71	0.94	1.15	0.84	1.46
H9	0.07	0.54	0.50	0.25	0.36

Source: Authors’ own elaboration.

Table 11. Return on assets (ROA) (2019–2023).

	2019	2020	2021	2022	2023
H1	−7.9%	−14.7%	−6.7%	0.8%	−11.0%
H2	7.6%	−21.7%	−14.8%	−3.7%	0.4%
H3	1.8%	−5.0%	−0.5%	7.4%	5.6%
H4	−5.6%	0.1%	0.1%	−0.1%	0.3%
H5	3.1%	−14.8%	3.8%	2.9%	1.1%
H6	−0.2%	−6.7%	9.0%	2.1%	4.0%
H7	−2.2%	−4.6%	1.0%	1.4%	0.3%
H8	−0.4%	2.3%	10.6%	6.0%	2.7%
H9	−0.8%	−0.8%	−1.5%	−3.2%	−0.3%

Source: Authors’ own elaboration.

Table 12. Level of indebtedness (2019–2023).

	2019	2020	2021	2022	2023
H1	74%	85%	61%	59%	67%
H2	41%	51%	72%	84%	78%
H3	47%	42%	28%	28%	31%
H4	98%	78%	78%	78%	77%
H5	28%	28%	25%	28%	31%
H6	10%	14%	65%	70%	74%
H7	54%	56%	58%	70%	69%
H8	12%	20%	15%	20%	16%
H9	17%	18%	18%	19%	19%

Source: Authors’ own elaboration.

Immediate liquidity showed substantial differences across the hotels analysed during the period 2019–2023. While some establishments recorded comparatively higher values in specific years, most exhibited lower levels throughout the study period. These findings indicate that cash availability relative to current liabilities evolved differently across the hotels, with no common trajectory observed during the period analysed.

Return on assets (ROA) showed notable differences across the hotels analysed during the period 2019–2023. Although several establishments recorded improvements after 2020, the magnitude and continuity of these changes varied considerably between hotels. Hotels H3 and H8 reported the highest ROA values during the study period, whereas Hotels H1 and H9 recorded predominantly negative results. Hotels H2, H4, H5, H6 and H7 alternated between negative and positive ROA values over the five-year period. Overall, the results indicate that improvements in operating revenue were not consistently accompanied by higher returns on assets across the hotels analysed.

The level of indebtedness differed across the hotels analysed during the period 2019–2023. Hotels H1, H2 and particularly H4 maintained comparatively high levels of indebtedness throughout most of the study period, whereas H3, H5, H8 and H9 consistently reported lower levels. By contrast, Hotels H6 and H7 showed a progressive increase in indebtedness over time. Overall, the results indicate that the financial structure evolved differently across the hotels, reflecting different financing positions throughout the study period.

Taken together, the complementary financial indicators broaden the interpretation of the results by incorporating information on liquidity, return on assets, return on equity and indebtedness alongside the evolution of operating revenue, costs, expenses and profits. Although some establishments showed improvements in specific indicators during the study period, the financial indicators evolved differently across the hotels analysed. These findings suggest that increases in operating revenue and improvements in profits were not consistently accompanied by similar changes in liquidity, profitability or indebtedness, highlighting that financial performance evolved differently among the hotels analysed.

5. Discussion

5.1. The Revenue Recovery Was Not Sufficient to Generate Sustainable Financial Value

The results show that the recovery in operating revenue observed in most hotels did not uniformly translate into an improvement in operating profit, net profit or net margin. These findings suggest that sales growth, although an important component of commercial recovery, was not sufficient on its own to generate sustainable financial value. Rather, the financial trajectories observed indicate that the conversion of higher sales into sustainable financial results was associated with differences in cost and expense structures across the hotels analysed. In this regard, financial recovery should be understood as a comprehensive process that goes beyond the restoration of demand and requires the efficient management of business resources.

These findings are consistent with the Value-Based Management perspective, which holds that revenue growth only generates value when accompanied by improvements in margins and operational efficiency [56,57]. Furthermore, they build on the evidence reported by Tudose [42] and De La Vega Cáceres [25], who point out that an increase in sales represents an opportunity to create economic value only when it translates into a greater capacity to generate profits. Similarly, the results support the arguments put forward by Lulaj [43] and Chakri [44] by suggesting that the management of costs and expenses is a determining factor in translating commercial growth into improved financial performance.

Unlike studies that have assessed the recovery of the hotel sector primarily through demand indicators, revenue or isolated financial ratios [6,8,9], this study shows that understanding financial performance requires an integrated analysis of the evolution of revenue, operating structure, profits and net margin. This approach made it possible to identify that hotels operating within the same recovery context followed different financial trajectories, suggesting that the generation of sustainable financial value depends not only on market recovery but also on the management decisions taken within each organisation.

5.2. Operational Structure as a Determinant of Financial Performance

The results show that differences in the structure of costs and expenses were one of the main factors associated with hotels’ ability to translate revenue recovery into financial results. Although several establishments increased their revenue following the pandemic, the high proportion of costs and expenses limited profit generation and reduced the margins achieved. This pattern confirms that sales growth, on its own, does not guarantee improved financial performance when the operational structure absorbs a significant proportion of revenue.

This finding is consistent with the literature, which recognises cost control and operational efficiency as key factors in enhancing profitability and creating corporate value [43,44]. It also reinforces the arguments put forward by Brigham and Ehrhardt [22], Gitman et al. [23] and Ross et al. [24], who maintain that financial management should be geared towards striking a balance between growth, efficiency and profitability. In this context, the results show that financial sustainability depends not only on increasing sales, but also on efficiently managing the resources that underpin the business.

5.3. Profit Quality as an Indicator of Financial Sustainability

A comparison of operating profit and net profit revealed that, in some hotels analysed, the final results were influenced by non-operating items, suggesting that a positive net profit does not necessarily reflect stronger performance in core hotel operations. From this perspective, the composition of profits becomes an important consideration in the assessment of financial sustainability, as it allows a distinction to be made between results generated through operating activities and those associated with non-operating items.

This finding extends previous research on the financial performance of hotels by incorporating an assessment of the composition of profits rather than focusing solely on their magnitude. Consequently, the study suggests that any interpretation of financial performance should take into account the source of profits in order to assess companies’ actual ability to sustain their profitability in the long term.

5.4. Financial Condition During the Post-Pandemic Recovery

The complementary financial indicators show that differences in operating revenue growth coexisted with varying levels of liquidity, profitability and indebtedness among the hotels analysed. The observed differences suggest that financial recovery evolved differently across the establishments, indicating that hotels operating within the same economic context may exhibit different financial outcomes.

These findings are consistent with recent studies highlighting the importance of liquidity, asset-use efficiency and financing structure in strengthening organisational financial resilience [68,69]. However, the present study shows that these indicators provide greater explanatory value when interpreted alongside trends in revenue, operating structure and profits, rather than being analysed in isolation.

5.5. Theoretical and Managerial Implications

The findings contribute to the literature on financial management and financial sustainability by extending the analysis of hotel recovery beyond operating revenue growth alone. Rather than examining isolated financial indicators or estimating statistical relationships between variables, this study reconstructs the financial sequence through which operating revenue may—or may not—be reflected in operating profit, net profit, net margin and, ultimately, sustainable financial value. This integrated descriptive perspective addresses the gap identified in previous studies, which have generally focused on demand recovery, revenue trends or individual financial indicators without examining the complete financial transformation process.

The findings are consistent with Financial Management Theory, highlighting that operating revenue alone provides only a partial view of financial performance, as financial outcomes also depend on the structure of operating costs, operating expenses and profits. They are also consistent with Value-Based Management, showing that revenue growth does not necessarily translate into sustainable financial value. From the perspective of Dynamic Capabilities Theory, the heterogeneous financial trajectories observed among the hotels are consistent with the proposition that organisations operating under the same external conditions may experience different outcomes. Although dynamic capabilities were not directly examined, the theory is used solely as an interpretative framework to contextualise the observed heterogeneity. From a managerial perspective, the findings suggest that revenue recovery strategies should be complemented by continuous monitoring of costs, expenses and profits to strengthen financial sustainability.

Recognising the importance of strengthening financial management does not, in itself, guarantee improved economic performance. Transforming commercial growth into financial value requires organisations to develop the capabilities needed to implement, in a systematic manner, strategies focused on cost control, operational efficiency and the generation of sustainable profits. In this regard, the principal challenge lies not only in identifying the factors that influence financial performance but also in the ability to translate that knowledge into managerial decisions that enhance organisational sustainability.

Likewise, contemporary literature recognises that financial resilience constitutes a fundamental component of tourism sustainability, as it determines firms’ capacity to absorb disruptions, adapt to changing environments and maintain their long-term economic viability [70,71]. From this perspective, financial sustainability extends beyond the recovery of tourism activity, as it entails the ability to transform commercial growth into sustainable financial performance through the efficient management of resources and the operating structure.

6. Conclusions

This study shows that the revenue recovery observed in four-star hotels in the province of Imbabura during the 2019–2023 period did not translate uniformly into sustainable financial recovery. Although most establishments experienced a gradual increase in operating revenue following the impact of the pandemic, differences in cost and expense structures influenced the evolution of operating profit, net profit and net profit margin, resulting in heterogeneous financial trajectories among hotels operating within the same economic environment. These findings confirm that sales growth is a necessary, but not sufficient, condition for the creation of financial value. These financial trajectories are representative of firms in ‘emerging tourist destinations’, where structural constraints in access to credit and higher operational volatility make financial management a critical survival factor rather than just a growth tool.

From a theoretical perspective, the study advances understanding of the relationship between revenue recovery and financial value creation by integrating the principles of Financial Management, Value-Based Management and Dynamic Capabilities within a descriptive and exploratory financial diagnostic framework. Unlike studies focusing exclusively on financial indicators or explanatory models, this research reconstructed, in an integrated manner, the financial sequence linking the evolution of operating revenue, cost and expense structures, profits and net profit margin, complemented by indicators of liquidity, return on assets and leverage. This approach provides a more comprehensive understanding of the process through which revenue recovery does—or does not—translate into sustainable financial performance.

From a managerial perspective, the findings suggest that achieving sustainable financial value in the hotels analysed requires more than the recovery of demand. The heterogeneous financial trajectories observed indicate that sales growth alone was insufficient to improve financial performance consistently. Instead, the integrated analysis of revenue, costs, expenses and profits highlights the importance of strengthening cost and expense management and of generating results primarily through core operating activities.

From a practical perspective, these findings highlight the importance of using financial diagnosis as a decision-support tool in hotel establishments. Rather than focusing exclusively on increasing occupancy or sales, managers should complement commercial recovery strategies with continuous monitoring of revenue, costs, expenses, operating profitability and complementary financial indicators. Such an integrated approach may facilitate the early identification of financial imbalances and support more informed managerial decision-making aimed at strengthening sustainable financial value.

The study has certain limitations related to the sample size and the availability of complete and comparable public financial information for the 2019–2023 period, which restrict the generalisability of the findings to other contexts. Accordingly, the results should be interpreted in light of the specific characteristics of the nine four-star hotels analysed in the province of Imbabura. Nevertheless, the financial diagnostic approach adopted provides useful evidence for understanding how revenue recovery may follow different financial trajectories depending on organisations’ operating structures, profit-generating capacity and financial condition.

Future research could broaden the scope of the analysis by including other categories of hotel establishments, different tourism destinations or subsequent periods in order to assess the consolidation of financial recovery and value creation across diverse economic contexts. Likewise, the use of longer time series would contribute to a better understanding of the evolution of the financial strategies implemented by organisations once the immediate recovery phase has passed.

Furthermore, subsequent studies could extend the analysis through the use of longitudinal databases and panel data approaches, enabling a more robust examination of the temporal evolution of the relationships between liquidity, profitability, leverage and operational efficiency. Similarly, incorporating efficiency analysis techniques, such as Data Envelopment Analysis (DEA) or stochastic frontier models, would provide deeper insights into the factors influencing the financial performance of hotel establishments. Finally, comparative studies across different provinces, emerging tourism destinations or regions within developing economies would contribute to assessing the transferability of the findings and identifying how institutional, economic and financial conditions influence financial sustainability and recovery processes in hotel establishments. Complementary mixed-methods approaches integrating financial information with qualitative evidence gathered from hotel managers could also enrich understanding of the strategies adopted in response to conditions of uncertainty.