The Impact of the Covid-19 Pandemic on Profitability Indicators in the Hospitality Sector

Abstract

Abstract Many business entities in Slovakia felt the pressure of government restrictions during the Covid-19 pandemic, especially entities from SK NACE I: accommodation and food services activities. The main objective of this article is to analyse the return on equity, assets and sales in selected sectors in Slovakia and find out if the Covid-19 pandemic has an effect on these profitability ratios. Firstly, we use ex-post financial analyses and then Friedman’s nonparametric test to find those groups of years between which there are differences. The study period 2016-2021 includes comparisons before the Covid-19 period, as well as dealing with the pandemic era. Our investigation concerns 321 business entities from SK NACE I, especially from Division 56: Food and beverage service activities. The findings showed the impact of the pandemic on profitability indicators such as total assets, equity, and sales. Therefore, it was feasible to establish that these are the indicators most affected by the pandemic, such as the economic outcome after taxes, assets, equity, and sales. Additionally, significant differences in indicators were confirmed in the pairs of years 2019–2020 and 2019–2021. Significant changes were confirmed between the years provided, which may most likely be attributed to the outbreak of the pandemic of the viral disease Covid-19. This study and its results may have added value for the management of business entities and the government of the Slovak Republic by stimulating the negative impact of the Covid-19 pandemic on firms in these sectors.