Dynamic panel analysis of the determinants of hotel business success

The study examines the impact of macroeconomic and microeconomic factors on hotel performance, measured by return on equity (ROE), in the Republic of Serbia. A dynamic panel data model was applied to a sample of 94 hotels. Macroeconomic indicators include GDP growth, inflation, political risk, infrastructure quality, and financial market development, while microeconomic factors cover service quality, management quality, employee pro-social behavior, guest satisfaction, and guest loyalty. The findings highlight the critical role of management quality in driving hotel performance. Conversely, high structural capital efficiency, unfavorable financial market conditions, and poor past performance negatively affect success. This research contributes to the hospitality literature by integrating macroand micro-level determinants within a dynamic framework, offering insights for both policymakers and hotel managers on how external conditions and internal practices jointly shape financial outcomes. The main limitation of the study is its inability to test all variables simultaneously within a single model due to issues with the positive-definiteness of the matrix.