Short-Term Debt and Long-Term Debt Determinants in Small and Medium-Sized Hospitality Firms

In this paper, based on a sample of 177 hotel small and medium-sized enterprises (SMEs) for the period 2004–2012, the authors test the applicability of Trade-Off Theory and Pecking Order Theory to the capital structure decisions of hotel SMEs, focusing on an analysis of short-term and long-term debt. The multiple empirical evidence obtained shows that the applicability of Trade-Off Theory to hotel SMEs’ capital structure decisions is much greater in relation to long-term debt than to short-term debt and, on the contrary, the applicability of Pecking Order Theory is much greater in relation to short-term debt than to long-term debt. In light of the evidence, the authors offer suggestions for owner/managers of hotel SMEs.