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230 Finland
sation, gains or losses on the sale of property, and
income taxes, as these are ownership issues.
The comparison of an enterprise's net profits to
the amount invested by the owners is referred to as
return on equity �or return on investment) and
is the measurable financial objective for owners.
Mathematically, it is computed by dividing the net
income by the average investment during the
period in which the net income was earned. Often,
the return on investment is a stated financial
objective of the investor and is used by management
to drive the selling price of the product in a
`bottom-up' approach �or Hubbart formula) to
pricing. The first step in using this approach to
establish the selling price of a tourism product,
such as a room in a full service hotel, is to provide
for income taxes and to add in the fixed charges
�management fees, rent, property taxes, insurance,
interest, depreciation and amortisation, and gains
or losses on the sale of the hotel). Undistributed
operating expenses, or the cost of the service
departments, are considered next. This involves an
estimate of the hotel payroll and related expenses
of service departments such as administrative and
general, data processing, human resources, transportation,
marketing, property operation and
maintenance, and energy costs. These costs are
added to the income before tax and fixed charges.
This result is the total operating profit that must be
generated from the revenue producing departments.
Income from each department �other than
rooms) is subtracted from the total operating profit
that needs to be generated from the revenue
producing departments. If an operating department
is projected to have a loss, this is added. The
rooms department payroll and related expenses are
added to derive the required total rooms revenue.
The average rooms selling price is determined by
dividing the total required rooms revenue by the
projected total number of units to be sold. This
calculation meets the hotel investor's financial
objective.
Further reading
Schmidgall, R. �1997) Hospitality Industry Managerial
Accounting, 4th edn, East Lansing, MI: Educa-
tional Institute of the American Hotel and Motel
Association.
Finland
STEPHEN M. LEBRUTO, USA
Tourism in Finland is based on natural attractions
featuring lakes �187,888 in number), forests and a
well-kept environment. Further, the exoticism
of Lapland, north of the Arctic Circle, and the
belief that Santa Claus has his home there,
generates demand from other countries. Finland
is geographically well situated in terms of air routes
from North America and Asia to Europe, and the
integration of Europe has strengthened its position
as a gateway to Russia, especially to St Petersburg
and the Baltic states.
The main tourism markets of Finland are
Sweden, Germany and Russia, but growth from
Asian markets has been considerable. Domestic
tourism, however, accounts for over 70 per cent
of total overnight stays. The main tourism season is
summer, with nature tourism and cultural
festivals as well as more specific attractions such
as architecture-based sightseeing. However, winter
tourism with cross-country skiing and Christmas
visits has showed the strongest growth in
recent years. The tourism balance is negative, with
Finns spending more abroad than do foreigners in
Finland. Finns are among the top international
tourists in proportion to the population. In 1997,
about five million took 5.2 million trips abroad �as
well as 28.3 million domestic trips).
During recent years, the Finnish government
has put more emphasis on service industries and a
new tourism strategy �adopted in 1996) aims at
improving the competitiveness of the industry
while at the same time protecting the unique values
of nature and environment. Foreign investment is
also welcome and actively promoted. Tourism
products offering experiences based on nature
and culture are developed with the goal of
positioning Finland as a destination of ecologically
sustainable tourism. The government is
also giving the Finnish Tourist Board more
resources for marketing abroad.