Investment in hostels

Information agency Credinform represents the ranking of the largest Russian hostels. Hostels – legal entities with the largest volume of annual revenue (TOP-10) were selected for the ranking, according to the data from the Statistical Register for the latest available periods (for 2016 - 2018). Then they were ranked by the return on equity ratio (Table 1). The analysis was made on the basis of the data of the Information and Analytical system Globas.

Return on equity (%) is calculated as a relation of company’s net profit to its equity. The ratio determines the efficiency of use of capital invested by the owners of the enterprise and shows how many monetary units of net profit were earned by each unit invested by owners.

This indicator is used by investors and company’s owners to measure their own investment. The higher the ratio value, the more profitable the investment. By the return on equity with a negative or zero value it is necessary to analyze the advisability and efficiency of investment in the enterprise in the future. In such cases, the ratio value should be compared with other investment.

Too high value of the indicator, in its turn, can negatively affect the financial stability of a company. High profitability implies also higher risks.

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention to all combination of company’s financial indicators and ratios.

Таблица 1. Net profit, revenue, return on equity ratio, solvency index Globas of the largest hostels (TOP-10)
Name, INN, region Sales revenue, mln RUB Net profit (loss), mln RUB Return on equity, % Solvency index Globas
2017 2018 2017 2018 2017 2018
1 2 3 4 5 6 7 8
INN 7842074140
down22,85 up22,57 down5,47 down3,94 down-153,23 up998,98 274 Medium
INN 7713389343
up21,66 up26,94 up0,89 up2,48 up82,08 down69,49 243 Strong
INN 7841491060
up18,82 up22,06 down-1,60 down-3,08 up25,60 up33,01 346 Adequate
INN 7705557749
down27,33 up37,94 up3,22 down1,01 down124,72 down28,16 262 Medium
INN 7702375797
down26,71 up28,28 down2,11 down1,60 down28,56 down18,14 272 Medium
INN 7720791790,
is in the process of reorganization in the form of transformation, since 09.06.2017
up10,15 up17,81 up-5,83 up0,29 down33,39 down-1,66 306 Adequate
INN 7743111955
down17,63 up20,45 up-2,85 up0,84 down8,36 down-2,52 307 Adequate
INN 7726053654
up20,63 up30,26 up-0,64 up0,89 down3,73 down-5,57 298 Medium
INN 7842504932
up137,53 down118,65 up7,53 down-1,03 down118,02 down-18,95 253 Medium
INN 7840033501
up16,03 up19,14 up1,57 down-0,63 down83,97 down-50,77 300 Adequate
Total by TOP-10 companies up319,34 up350,08 up9,88 down6,31    
Average value by TOP-10 companies up31,93 up35,01 up0,99 down0,63 down35,52 up106,83
Industry average value up33,17 up38,79 down-12,74 up-4,65 up3 388,74 down1 229,76

Up improvement of the indicator to the previous period, Down decline in the indicator to the previous period.

The average value of the return on equity ratio of TOP-10 companies in 2018 is significantly lower than the average value for the hotel services industry. Two companies improved results in 2018.

Picture 1. Return on equity ratio and revenue of the largest hostels (TOP-10) Picture 1. Return on equity ratio and revenue of the largest hostels (TOP-10)

Over 10 years, the average values of the return on equity ratio in the hotel services industry have a tendency to increase. (Picture 2).

Picture 2. Change in industry average values of the return on equity ratio of hotel facilities in 2009 – 2018 Picture 2. Change in industry average values of the return on equity ratio of hotel facilities in 2009 – 2018
TOP-10 of regions by the share of small business

In the countries with the modern economic structure, over 50% of work force is employed in small and medium-sized enterprises. In Russia, this figure is 22%. In 2018, the share of small business in total revenue of companies (including large) was 27,9%.

Contribution of small companies to the GDP is obviously insufficient. Russia is still the country of large corporations and monopoly, and therefore there are artificially high prices and lack of fair competition.

The Government is seeking to bring the GDP share in the economy to the level of developed countries up to 2025. However, there are already regions in Russia with the regional GDP financing mainly by small and medium-sized business.

The Republic of Dagestan with small business’ total share of 75,7% is ranked the first. This fact is due to the traditional economy of the region, where the population is involved in personal subsidiary economy and handicraft industry. Large business is slightly spread because of unavailability of rich natural recourses and effective demand. The similar situation prevails in neighboring North Caucasus republics (see Table 1).

TOP-10 also includes Ivanovo region (72,5%), Sevastopol (65,3%), Kirov region (56%) and Zabaikalye territory (55,5%).

Despite the high share of small business in the leading regions, the absolute contribution of small business is minimal: 1,7 trillion RUB compared to 59,9 trillion RUB for the whole country.

Table 1. TOP-10 of regions with the highest share of small business in the total turnover in 2018, %
Region Small business’ share in total turnover of companies, % Small business’ turnover, billion RUB Total turnover of companies, billion RUB
1 Republic of Dagestan 75,7 308 406
2 Ivanovo region 72,5 425 586
3 Sevastopol 65,3 81 125
4 Kabardino-Balkarian Republic 62,2 75 121
5 Chechen Republic 61,5 109 177
6 Republic of Ingushetia 61,0 16 26
7 Republic of North Ossetia-Alania 58,9 64 108
8 Kirov region 56,0 333 595
9 Republic of Adygea 55,5 90 162
10 Zabaikalye territory 55,5 211 381
  Russian Federation 27,9 59 936 214 562

Source: ЕМИСС, Unified interdepartmental statistical information system, Rosstat, calculations of Credinform based on the System Globas

The highest turnover of small business in absolute figures is recorded for Moscow - 16,7 trillion in 2018. However, the share of small business in total turnover of companies slightly exceeded 25%.

Novosibirsk region is ranked the fourth with the highest share of small business in the regional economy – 50,5% (see Picture 1).

Picture  1. Small business’ share in the regions with the highest turnover of small and medium-sized business Рисунок 1. Small business’ share in the regions with the highest turnover of small and medium-sized business

The priority is to increase the contribution of small business to the GDP, and it is involved stable and continued development of the economy, fair competition and entering new selling markets. However, lack of plans to reduce the tax burden, cancellation of single tax on imputed income from 2021, huge fiscal injections to the large state-owned companies to the detriment of small companies – all these call into question the achievement of the goal.