Financial Condition of the Hotel Infrastructure of the Arctic Zone of Russia and its Determinants

Valentina V. Karginova-Gubinova, Anastasiia V. Vasileva

Karelian Research Centre of the Russian Academy of Sciences, Petrozavodsk, Russia

Abstract

Tourist interest in the Russian Arctic has been growing in recent years. The development of tourism can improve the economic and social well-being of the local population, but it depends largely on the efficiency of key market actors. With this in mind, this paper aims to study the financial condition of Arctic collective accommodation facilities. The purpose of the study is to determine the factors that determine the financial performance of hospitality venues in the municipalities of the Arctic zone of Russia, and to develop a list of recommended measures to improve their efficiency. The hypothesis was the assumption of a larger number and better financial condition of the hospitality venues in those municipalities that enjoy a more favorable climate and economic conditions for corporate activity and that boast prerequisites for cultural and educational, business, domestic and rural tourism. The methodology of the work involves analyzing the data from the accounting statements of the hospitality venues of the Russian Arctic and municipal statistics. The methods of descriptive statistics were used, cluster, correlation and regression analyses were carried out, in particular, panel models of dependencies of the collective accommodation facilities financial indicators on various factors were built. The results of the study showed that the financial condition of the collective accommodation facilities varies across Arctic municipalities and is not related to climate, prerequisites of cultural and recreational and domestic tourism, although these factors affect the number of these organizations. Higher financial results of the collective accommodation facilities in municipalities with a better economic situation are observed, but there is a lower need for tourism as a source of additional income and diversification of activities. The potential for increasing the number and improving the profitability of the collective accommodation facilities by strengthening the prerequisites for business tourism is significantly limited. Theoretical significance has confirmed the heterogeneity and non-stationarity of factors affecting the financial condition of the Arctic collective accommodation facilities. The practical value of the work is due to the formed recommendations for the development of tourism in the Russian Arctic.

Keywords

collective accommodation facilities; hotel profitability; Russian Arctic; Arctic zone; Arctic tourism; Arctic brand; climate favourability; tourism prerequisites

JEL classification

References

1. Ntibanyurwa, A. (2006). Tourism as a Factor of Development. WIT Transactions on Ecology and the Environment, Vol. 97, 1–12. https://doi.org/10.2495/ST060071

         2. Belyaeva, O.I., Pryamichkin, V.A. (2022). Strategic Approach to Tourism Development in Small Towns. Regional Economy. South of Russia, Vol. 10, No. 1, 126–136. (In Russ.). https://doi.org/10.15688/re.volsu.2022.1.12

         3. Efimov, I.P., Gurtov, V.A., Stepus, I.S. (2022). Recruitment Needs of the Russian Arctic Economy: Future Outlook. Voprosy Ekonomiki, No. 8, 118–132. (In Russ.). https://doi.org/10.32609/0042-8736-2022-8-118-132

         4. Aldybayev, B., Gubarenkо, A., Imangulova, T., Ussubaliyeva, S., Abdikarimova, M. (2021). Popularization of Objects of the Cultural and Historical Heritage of the Republic of Kazakhstan as a Factor for the Development of Ethnocultural Tourism of the Country. GeoJournal of Tourism and Geosites, Vol. 39, No. 4spl, 1450–1460. https://doi.org/10.30892/gtg.394spl16-789

         5. Daly, P., Dias, A.L., Patuleia, M. (2021). The Impacts of Tourism on Cultural Identity on Lisbon Historic Neighbourhoods. Journal of Ethnic and Cultural Studies, Vol. 8, No.1, 1–25. https://doi.org/10.29333/ejecs/516

         6. Buckley, R., Zhong, L., Martin, S. (2021). Mental Health Key to Tourism Infrastructure in China's New Megapark. Tourism Management, Vol. 82, 104169. https://doi.org/10.1016/j.tourman.2020.104169

         7. Provorova, A.A., Smirennikova, E.V., Ukhanova, A.V. (2024). Population Health in the Russian Arctic: Problems, Challenges, Solutions. Arctic and North, No. 55, 161–181. (In Russ.). https://doi.org/10.37482/issn2221-2698.2024.55.161

         8. Pilyasov, A.N., Molodtsova, V.A. (2021). Resilience of Russian Arctic Cities: Methodological Approaches and Quantitative Assessments. Proceedings of the Komi Science Centre of the Ural Division of the Russian Academy of Sciences, No. 2, 5–26. (In Russ.). https://doi.org/10.19110/1994-5655-2021-2-5-26

         9. Kuznetsova, O.V. (2024). Economic Differentiation of Municipalities of the Russian Arctic and Their Receptivity to Federal Preferential Treatment. Economy of Regions, Vol. 20, No. 2, 462–476. (In Russ.). https://doi.org/10.17059/ekon.reg.2024-2-8

         10. Mitrović, A., S. Knežević, S., Milašinović, M. (2021). Profitability analysis of hotel companies in the Republic of Serbia. Hotel and Tourism Management, Vol. 9, Issue 1, 121–134. https://doi.org/10.5937/menhottur2101121M

         11. Nguyen, N.T., Yadav, M., Pande, S., Bhanot, A., Hasan, M.F. (2022). Impact of Diversity Management on Organizational Performance in Hotel Organizations: A Conceptual Framework. International Journal of System Assurance Engineering and Management, Vol. 13, 186–196. https://doi.org/10.1007/s13198-021-01358-7

         12. Babajee, R.B., Seetanah, B., Nunkoo, R. (2020). The Determinants of Hotel Financial Performance: An Intellectual Capital Perspective. Journal of Hospitality Marketing & Management, Vol. 29, Issue 8, 1008–1026. https://doi.org/10.1080/19368623.2020.1703870

         13. Beerli-Palacio, A., Martín-Santana, J.D., Román-Montoya, C. (2020). Complementary Services at Hotels in Accordance with Their Pricing Strategy and the Price Sensitivity of Tourists. International Journal of Hospitality Management, Vol. 87, 102458. https://doi.org/10.1016/j.ijhm.2020.102458

         14. Chen, C.-J. (2024). Advertising Fee as a New Supply Chain Coordination Approach between Hotels and Online Travel Agencies. Journal of Hospitality and Tourism Insights, Vol. 7, Issue 4, 2422–2441. https://doi.org/10.1108/JHTI-06-2023-0400

         15. Babajee, R.B., Seetanah, B., Nunkoo, R., Gopy-Ramdhany, N. (2022). Corporate Social Responsibility and Hotel Financial Performance. Journal of Hospitality Marketing & Management, Vol. 31, Issue 2, 226–246. https://doi.org/10.1080/19368623.2021.1937433

         16. Floričić, T. (2020). Sustainable Solutions in the Hospitality Industry and Competitiveness Context of “Green Hotels”. Civil Engineering Journal, Vol. 6, No. 6, 1104–1113. https://doi.org/10.28991/cej-2020-03091532

         17. Lado-Sestayo, R., Vivel-Búa, M., Otero-González, L. (2020). Connection between Hotel Location and Profitability Drivers: An Analysis of Location-specific Effects. Current Issues in Tourism, Vol. 23, Issue 4, 452–469. https://doi.org/10.1080/13683500.2018.1538203

         18. Lima Santos, L., Gomes, C., Malheiros, C., Lucas, A. (2021). Impact Factors on Portuguese Hotels’ Liquidity. Journal of Risk and Financial Management, Vol. 14, Issue 4, 144. https://doi.org/10.3390/jrfm14040144

         19. Zhang, D., Xie, J., Sikveland, M. (2021). Tourism Seasonality and Hotel Firms’ Financial Performance: Evidence from Norway. Current Issues in Tourism, Vol. 24, Issue 21, 3021–3039. https://doi.org/10.1080/13683500.2020.1857714

         20. Quan, L., Al-Ansi, A., Han, H. (2022). Assessing Customer Financial Risk Perception and Attitude in the Hotel Industry: Exploring the Role of Protective Measures Against COVID-19. International Journal of Hospitality Management, Vol. 101, 103123. https://doi.org/10.1016/j.ijhm.2021.103123

         21. Yacoub, L., ElHajjar, S. (2021). How Do Hotels in Developing Countries Manage the Impact of COVID-19? The Case of Lebanese Hotels. International Journal of Contemporary Hospitality Management, Vol. 33, Issue 3, 929–948. https://doi.org/10.1108/IJCHM-08-2020-0814

         22. Crespí-Cladera, R., Martín-Oliver, A., Pascual-Fuster, B. (2021). Financial Distress in the Hospitality Industry During the Covid-19 Disaster. Tourism Management, Vol. 85, 104301. https://doi.org/10.1016/j.tourman.2021.104301

         23. Panjaitan, M., Br Sagala, P.N., Napitupulu, H.M. (2022). Effect of Current Ratio, Debt to Equity Ratio, Return on Equity Ratio, and Net Profit Margin Ratio on Financial Distress Conditions in Hotel, Restaurant, and Tourism Sub-Sector Companies Listed on the Indonesia Stock Exchange for the 2017–2020 Period. Budapest International Research and Critics Institute-Journal, Vol. 5, No. 1, 7756–7762. https://doi.org/10.33258/birci.v5i1.4518

         24. Pereira-Moliner, J., López-Gamero, M.D., Font, X., Molina-Azorín, J.F., Tarí, J.J., Pertusa-Ortega, E.M. (2021). Sustainability, Competitive Advantages and Performance in the Hotel Industry: A Synergistic Relationship. Journal of Tourism and Services, Vol. 12, No. 23, 132–149. https://doi.org/10.29036/jots.v12i23.282

         25. Kitsis, V.M., Tsapko, M.A. (2019). Analysis of the Financial Condition of the Admiral Hotel (Saransk, Republic of Mordovia). Trends in the Development of Science and Education, No. 49-8, 52–57. (In Russ.). https://doi.org/10.18411/lj-04-2019-161

         26. Mamleeva, E.R, Trofimova, N.V., Sazykina, M.Yu., Karachurina, A.A. (2024). Collective Accommodation Facilities in the Republic of Bashkortostan: Assessment of Activities and Efficiency of Functioning. Bulletin USPTU. Science, Education, Economy. Series Economy, No. 2, 45–58. (in Russ.). https://doi.org/10.17122/2541-8904-2024-2-48-45-58

         27. Timoshenko, D.S. (2021). Branding of the Arctic Tourism Destinations in Russia. Arctic and North, No. 42, 257–270. (In Russ.). https://doi.org/10.37482/issn2221-2698.2021.42.257

         28. Knyazeva, G.A., Porotnikova, N.A., Antipov, V.V., Makukha, V.V. (2023). Arctic Tourism as a Driver of Sustainable Development of the Territory: Research of the Interest of Local Stakeholders in the Komi Republic. Arctic and North, No. 52, 180–198. (In Russ.). https://doi.org/10.37482/issn2221-2698.2023.52.180

         29. Ren, С., Jóhannesson, G.T., Ásgeirsson, M.H., Woodall, S., Reigner, N. (2024). Rethinking Connectivity in Arctic Tourism Development. Annals of Tourism Research, Vol. 105, 103705. https://doi.org/10.1016/j.annals.2023.103705

         30. Kosheleva, T.N., Biryukova, A.V. (2024). Managing the Parameters of the Internal Sustainability of the Service System within the Framework of Tourist and Recreational Clusters in the Arctic Zone. Journal of Economics, Entrepreneurship and Law, Vol. 14, No. 2, 413–428. (In Russ.). https://doi.org/10.18334/epp.14.2.120352

         31. Raheem, D., Holopainen, A., Koegst, J., Tulimaa, M., Benkherouf, M. (2022). Promoting Sustainability within the Nordic-Arctic Region’s Food System: Challenges and Trends. Sustainability, Vol. 14, Issue 15, 9716. https://doi.org/10.3390/su14159716

         32. Cherepovitsyn, A.E., Tcvetkov, P.S., Evseeva, O.O. (2021). Critical analysis of methodological approaches to assessing sustainability of arctic oil and gas projects. Journal of Mining Institute, Vol. 249, 463–479. (In Russ.). https://doi.org/10.31897/PMI.2021.3.15

         33. Karginova-Gubinova, V.V. (2024). Inorganic Organics: Development of the Organic Products Market under the Conflict of Satisfiable Interests. Moscow, PRIMEC Publishers, 300 p. (In Russ.). https://doi.org/10.18334/9785912925146

         34. Karginova-Gubinova, V.V., Vasilieva, A.V., Moroshkina, M.V., Potasheva, O.V. (2023). Attracting Investments in the Arctic: In Which Regions are Arctic Residents the Most Significant, Effective and Sustainable? Arctic: Ecology and Economy, Vol. 13, No. 3, 394–404. (In Russ.). https://doi.org/10.25283/2223-4594-2023-3-394-404

         35. Serova, N.A., Serova, V.A. (2021). Transport Infrastructure of the Russian Arctic: Specifics Features and Development Prospects. Forecasting Problems, No. 2, 142–151. (In Russ.). https://doi.org/10.47711/0868-6351-185-142-151

Acknowledgements

The study was supported by the Russian Science Foundation grant No. 24-28-00092, https://rscf.ru/project/24-28-00092/

About Authors

Valentina Vladimirovna Karginova-Gubinova

Candidate of Economic Sciences, Senior Researcher, Department of Regional Economic Policy, Institute of Economics, Karelian Research Centre, Russian Academy of Sciences, Petrozavodsk, Russia (185030, Petrozavodsk, Al. Nevsky Prospect, 50); ORCID https://orcid.org/0000-0002-5125-3388 e-mail: vkarginowa@yandex.ru

Anastasiia Vladimirovna Vasileva

Candidate of Economic Sciences, Senior Researcher, Department of Regional Institutional Development, Institute of Economics, Karelian Research Centre, Russian Academy of Sciences, Petrozavodsk, Russia (185030, Petrozavodsk, Al. Nevsky Prospect, 50); ORCID https://orcid.org/0000-0002-6019-819X e-mail: vasnask@gmail.com

For citation

Karginova-Gubinova, V.V., Vasileva, A.V. (2025). Financial Condition of the Hotel Infrastructure of the Arctic Zone of Russia and its Determinants. Journal of Applied Economic Research, Vol. 24, No. 2, 438-461. https://doi.org/10.15826/vestnik.2025.24.2.015

Article info

Received February 17, 2025; Revised March 10, 2025; Accepted March 22, 2025.

DOI: https://doi.org/10.15826/vestnik.2025.24.2.015

Download full text article: