Building competitive tourism establishments implies promoting changes in culture from a vision restricted to clients due to loyalty and referring to assuming management processes in which it is possible to understand potential clients and spaces of permanent knowledge so that daily activities are dynamic and open. Accordingly, a company interested in expanding to international markets seeks to optimize resources, reduce costs and improve productivity through business management. Hotel SMEs become the basis for them to approach management from competitive development and continuous improvement (Perea and Rivas, 2011, p. 13; Molina and Sánchez, 2016, p. 105; Becerra et al., 2016, p. 153; Fernández, 2017, p. 40).

Accordingly, firm competitiveness is seen as the degree to which customer satisfaction and shareholder value interact through continuous improvement of service quality, leveraging strengths, and implementing and responding to them through financial strength (Cong and Thu, 2020, p. 305). SMEs are different in terms of their organizational structure, technology, management style, labor, capital, and competition (Abosede et al., 2016, p. 320).

Although the hospitality sector has particular characteristics, such as being impacted by seasonality, most of them are domestic businesses, referring they are very independent. Therefore, the competitiveness of SME hotels is highly conditioned to the management skills of the entrepreneurs (Fraj et al., 2015, p. 35; Cong and Hai, 2015, p. 85).

To survive, companies must continuously adapt to a turbulent business environment by developing different internal knowledge and skills, which affect their profitability (Skuflic and Mlinaric, 2015, p. 480; Dimitrić et al., 2019, p. 1980). For Sensini and Bello (2021), SMEs show common practices in financial behavior because of the relationship between investment and financing decisions (Stowe et al., 1980, p. 975; van Auken and Tseng, 1993, p. 60; Helleloid and Sheikholeslami, 1996, p. 25).

For Lima et al. (2016, p. 5), in European SME hotel companies, the use of financial information, specifically the balance sheet, is essential for management. These authors, based on a study carried out in hotel SMEs in Portugal, established that financial ratios and the analysis of indicators are directly related to the decision-making process. They also indicate that studies carried out in different European countries have shown that financial analysis is one of the most important management tools for SMEs in the hospitality sector. In the current scenario of global competition, Lima et al. (2020b, p. 94) signal that it is increasingly important for managers to measure hotel performance, making decisions based on indicators and management tools. RevPAR (revenue per available room) and occupancy rates are the most common operational indicators. The former appears as one of the more complete indicators, which considers all sources of hotel revenues. To be as profitable as possible is the primary objective of any hotel, especially in the private sector; therefore, it is essential to increase revenues and reduce costs. For this reason, managers are primarily looking to increase lodging revenues. However, it is also important to have a view from a total revenue management perspective, as revenue from other departments must be considered (Santos et al., 2016, p. 5; Lado et al., 2017, p. 3140; Santos et al., 2018, p. 195).

Regarding European hotel SMEs, some authors have highlighted that these companies resort to external sources of financing as they are often unable to finance themselves (van Auken and de Lema 2003, p. 20). Moreover, given financial constraints, the choice tends to fall on new capital (Tyejbee and Bruno 1983, p. 1055). They also use medium and long-term debt to finance current assets, according to authors such as Carter and van Auken (1990, p. 75). For hotel companies, given their asset structure, it influences their financial performance. Fixed assets determine the high volatility of results; the same capital structure can facilitate the granting of loans, acting as collateral (Chen et al. 2014, p. 370).

According to Mueller and Sensini (2021, p. 120), based on a study carried out on Italian hotel SMEs, the most profitable companies prefer to use profits instead of debt to finance investments. In addition, the high level of tangible assets on SMEs means that these companies can obtain more financing since they can guarantee creditors and, in turn, reduce the risks to obtain said financing and the asymmetry of information. Many SMEs finance their income growth with debt growth. Being these debts preferably short-term. Finally, it is worth mentioning that these young companies have greater difficulty in acquiring financing.

According to Krugman (1991, p. 485), a company’s competitive success is based on its cost efficiency, innovations, technology and marketing activities and other internal factors of the organization. Customer loyalty as an element of marketing in hotel SMEs, for Hill and Jones (1996, p. 56), is a function of the company’s ability to satisfy needs. To achieve this, it will be necessary to focus on the client, structure, worker attitudes and mechanisms to bring clients to the organization, as well as satisfy needs through personalization of services and response time.

For Stanton et al. (2000, p. 65), positioning itself in the market refers to the percentage of total service sales in a given period in a specific market achieved by a company. Furthermore, Jeffrey and Caron (2002, p. 62) pointed out that marketing involves knowing the competition and creating pricing policies and customer satisfaction services.

Blesa et al. (2009, p. 235) and Yadav and Tripathi (2014, p. 29) indicated that marketing strategies lead to the search for the delivery of a superior value to the client thanks to the development of a greater capacity to perceive the market, develop response and adaptation capacities through innovation and imitation capacities, and interact with clients. In this way, marketing intelligence processes help to define an organizational competence that facilitates the competitive development of the company.

Martínez et al. (2010, p.170) and Shehu and Mahmood (2014, p. 460) stated that the impact on competitiveness is the sum of knowledge of the competition, market positioning and customer satisfaction. Thus, marketing, which is part of the internal factors of a company, impacts organizational competitiveness as it is one of the many factors added to achieve it. Hassen and Singh (2020, p. 100), from a study conducted in Europe, suggest that hotel SMEs establish customer-centric strategies to ensure long-term business success. Correspondingly, companies should consider sharing information so that they can survive in competitive business environments and achieve superior business performance. Gyulavári and Kenesei (2012, p. 11) and Webster et al. (2014, p. 15) pointed out that a competitive firm or company offers services to consumers in such a way that allows them to obtain a higher profit than the competition.

Alhakimi and Mahmoud (2020, p. 50), based on a study carried out in Croatia, stated that hotel SMEs must support innovative behaviour, generate new offers and participate in proactive marketing. It is important that these entities seek continuous improvement of their processes and services and invest in new technologies. To be competitive, they must know the competition by exploring the market to understand the strategies and activities they employ, the use of price adjustment, and the introduction of new or better offers (Szopinski and Staniewski 2016, p. 19). Being proactive, hotel SMEs can improve by researching market trends and the needs, interests and satisfaction of customers (Lara et al. 2017, p. 432).

The capacity for innovation is the implementation and creation of technology applied to new systems, policies, programs, products, processes and services for the organization (Liao et al., 2009, p. 165; Adomako, 2018, p. 9; Biemans and Griffin, 2018, p. 115). Weerawardena (2003, p. 420), Gerguri and Ramadani (2010, p. 30), Mazur and Zaborek (2016, 112) and Moen et al. (2018, 16) defined innovation as a modification of products, processes, services, and organizational and marketing systems to create customer value.

According to Domi et al. (2019, p. 136), in a study carried out on SMEs, those located in the United Kingdom tend to receive less financial support for the generation of innovation than SMEs in France, Germany and Spain. The empirical findings of Hongyun et al. (2019, p. 1240) in a study carried out on European hotel SMEs suggest that the development of a cutting-edge information technology infrastructure impacts quite considerably the capacity of companies to work across various geographic and organizational boundaries, enabling them to possibly create a competitive advantage in the current business environment. Hotel SMEs, with the necessary investment, can create value for the client and the company, directly or indirectly, depending on the cultural context. These same authors identified that in Europe, in hotel SMEs, human skills, information technology infrastructure and management style are fundamental to innovation. The findings also reveal that cost and cultural factors have a negative but significant relationship with the adoption of innovation.

In a tourism context (Williams and McGuire, 2005, p. 35; Domi et al., 2019, p. 137), hotel SMEs must particularly focus on innovation in both services and processes, driven by demand due to their nature of intensive service that depends on the quality of customer experiences and their satisfaction or dissatisfaction. For Wikhamn (2019, p. 105), satisfied customers represent the reputation and image of the hotel, as well as its position in the competition for customers, which is a non-financial performance indicator. Furthermore, changes in consumption patterns among tourists force SMEs to improve their operations in an attempt to remain competitive (Zehrer and Muskat, 2014, p. 350). In response, tourism SMEs should better understand clients’ needs and desires and act accordingly during each service encounter (Tsai et al., 2009, p. 6; O’Neill et al., 2010, p. 145; Tsai and Yang, 2014, p. 351).

It was observed that the studied hotel SMEs do not follow a methodology regarding strategies to promote business growth and the financing of their activities. There is no perceived interest in the formulation, implementation and evaluation of strategies to achieve goals and objectives, which could generate instability in the long term. This coincides with the results of Tsai et al. (2009, p. 6) and Perea and Rivas (2011, p. 10), who affirm that, in SMEs, the administrator or owner provides the capital. However, the management is empirical; the infrastructure of the companies is focused on meeting the demand and not on planning; there is a lack of vision and mission, the definition of objectives, goals and defined strategies to achieve said objectives and goals.

One of the main reasons for the closure of these companies corresponds to the impossibility of accessing the financial resources that SMEs require for their operation. Hence, the financing problem is of great relevance for hotel SMEs in Europe; without access to financing sources and sufficient flows, the company cannot operate and is less likely to survive. The above coincides with what Tsai et al. (2009, p. 7) mentioned, SMEs will seek the most appropriate form of leverage, which is related to the Pecking Order theory developed by Myers and Majluf (1984, p. 190), in which a hierarchy is established according to financing decisions, prioritizing internal financing, followed by debt and finally the capital increase.

It has been identified that the hotel business operates in an environment of extreme competitiveness on a global scale, and hotel managers make decisions in markets with very particular characteristics. Thus, it is necessary to have management support tools and, in the case of the hotel industry, operational ratios and indicators-such as RevPAR and TRevPAR-that analyze income from accommodation and focus on income. In addition, revenue management deals with supply and demand variables to maximize profitability, acting on prices and available capacity (Santos et al., 2016, p. 5; Lado et al., 2017, p. 3140; Santos et al., 2018, p. 195; Lima et al., 2020b, p. 121).

The findings also confirm the importance of customer relationship management in the hospitality industry concerning the marketing factor. In short, it is identified that hoteliers can successfully improve business profitability and performance by redefining customer relationship management strategies through restructuring operations. Successful customer relationship management is expected to increase customer loyalty, retain profitable customers and generate more revenue for hotels; hence, its performance and overall survival. It should be clear that customer relationship management is more than a software tool for sales; it is a marketing business strategy that seeks customer satisfaction to achieve retention and loyalty, which coincides with previous studies (Gyulavári and Kenesei, 2012, p. 11; Webster et al., 2014, p. 16).

Finally, in terms of innovation in hotel SMEs in Europe, it was observed that the types of innovation adopted, to a greater extent, are related more to the service than the process since the main motivation to carry out the innovations was to satisfy the needs imposed by demand. However, they are still not very relevant compared to the innovation processes of large companies. It was found that most of them made service innovations, either through changes to improve existing ones or by expanding their variety of services.

In Portugal, Spain, Germany, France, the Netherlands, Great Britain, and Italy, for process innovation, 90% of SMEs acquired goods, equipment or furniture, while 55% made changes or improvements in how the company provides the hotel service. The above coincides with what Aarstad et al. (2015, p. 357) and Nieves et al. (2016, p. 160) stablished, SMEs, due to their size and economic capacity, lack the necessary resources to develop and implement innovative characteristics in their processes and services.