Research on Financial Ratios Analysis of a Large Hotel Resort in Jeju Island

Abstract

This study aims to assess the financial health, operational efficiency, and overall performance of large hotel resorts in Jeju Island by analyzing key financial ratios over a five-year period (2019-2023). By evaluating financial ratios in four categories—stability, profitability, growth, and activity—this research provides a comprehensive view of the financial dynamics within the hotel industry, particularly as impacted by external factors such as the COVID-19 pandemic. The research targets five major hotel resorts in Jeju Island, selected based on their market influence and availability of financial data. The data were collected from financial statements, industry reports, and regulatory filings. The financial ratios were classified into four categories: stability, profitability, growth, and activity. The analysis revealed that the financial performance of the hotel resorts fluctuated significantly due to the impact of the COVID-19 pandemic. In the early years of the study, stability ratios such as the current ratio and debt ratio showed a decline, reflecting liquidity challenges. However, by 2023, the resorts demonstrated signs of recovery through improved liquidity management and reduced financial risk. Profitability ratios like the operating profit margin and return on assets showed a severe dip in 2020 due to the pandemic but gradually recovered in subsequent years, although still lagging behind industry averages, indicating ongoing operational challenges. Growth ratios, including revenue and asset growth rates, showed significant expansion in 2021 and 2022, reflecting the resorts' effective adaptation to changing market conditions. However, 2023 growth rates revealed variability, suggesting potential market saturation or internal operational issues. Activity ratios, such as asset turnover and accounts receivable turnover, demonstrated that the hotel resorts efficiently managed their resources, performing better than industry standards despite external disruptions. The financial ratio analysis underscores the importance of strategic planning and operational improvements in maintaining financial stability and competitiveness in the hotel industry. While the hotels showed resilience and capacity to recover from economic shocks, continuous efforts are necessary to address operational inefficiencies and ensure sustainable long-term growth. The study highlights the critical need for hotel resorts to optimize resource management and enhance profitability to remain competitive in the post-pandemic hospitality landscape.