A Note On Financial Leverage

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A financial leverage ratio gives the stakeholders an understanding of the long-term affluence of a firm in the hospitality industry. This ratio measures a hotel’s ability to meet its long-term debt obligations. The debt ratio is total debt divided total assets. Hotels have a lot of long-term liabilities in the form of debt, along with current liabilities. A lot of long-term assets are needed to successfully run a hotel, and therefore long-term debt financing is also needed. The debt ratio is used to measure a hotel’s ability to meet its long-term debt obligations. For the hotel industry, it is important to have low debt ratios, meaning long-term assets greatly outweigh the debt used to purchase them. The profitability ratios measure a…show more content…
This ratio is used to measure the amount of net profit earned on the revenue a company generates. For the hotel industry, profits are not going to be very high, as there are high operating costs to run a hotel. But a stakeholder should always look at a company’s net profit margin and compare it to the industry average to ensure it meets and surpasses the benchmark. All of the information regarding financial ratios in the hotel industry was found on invetopedia.com. Within the hotel industry, there are always going to be trends that have to be followed. According to Kelly McGuire and the Cornell Center for Hospitality Research, there are ten global trends that will impact the hotel industry in 2015 and 2016. The ten trends range from the millennials becoming the new power segment to sustainability and resource constraints. Let’s take a look at these ten trends a little more in detail. The first recognizable trend for the hotel industry is that the millennials are becoming the new power segment, and they are becoming the fastest growing customer segment in the hotel industry and they are expected to represent 50% of all travelers by the year 2025. With this rise, not just hotels, but any business will need to become more transparent and tech savvy, while also having a strong focus on responsiveness and a strong customer connection. Since technology is essential for the millennials, they will expect
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