Determinants of profitability amongst travel intermediaries within the Maltese tourism value chain : case study of a local incoming agent

Abstract

This study uses regression tests to examine the determinants of profitability amongst travel intermediaries within the Maltese tourism value chain by using a case study of a local incoming tour operator for the period 2005 to 2019. The model employed in this dissertation draws from the standard definition for profitability and uses profit margin ratios as a unit of measure. Based on previous studies, the model includes a measure relating to the size of the company (this being the average price per tourist handled), a cost efficiency ratio and a measure to capture external factors such as the firm鈥檚 market share relative to the total air seat capacity. This study leads to three main conclusions, such that cost efficiency is a significant determinant of incoming agent鈥檚 profitability. Secondly, that the spend per tourist to the organisation leads to a significant and positive impact on profitability. Lastly, that a firm鈥檚 market share of tourists handled over a country鈥檚 air seat capacity is a significant determinant of profitability with a positive sign, indicating that a firm would need to keep the same growth rate as a destination鈥檚 capacity increases, to keep the same profitability rate.