Determinants of performance in the Portuguese hotel industry: a dynamic panel data analysis across key tourism regions

Purpose This study identifies the main determinants of firm performance in Portuguese hotel industry, focusing on the moderating role of board size as a corporate governance mechanism. It also explores regional differences across Algarve, Madeira, and the Açores. Design/methodology/approach Our research employs a dynamic panel data methodology, using the generalized method of moments (GMM) system for estimation. The sample comprises 1.385 Portuguese hotel companies classified under CAE 551, covering the period from 2010 to 2023. Findings Our results show that firm-specific factors and regional context influence hotel performance. Social expenses have a positive impact on the Açores but are less valued in Madeira. Board size moderates the effect of social expenses, sometimes enhancing its value and other times reducing efficiency. Advertising, transportation costs, professional training, liquidity, and firm size also impact performance, but their effects differ by region. These findings emphasize the need for region-specific strategies that align governance practices with stakeholder expectations in tourism-driven economies. Research limitations/implications The findings offer region-specific guidance for industry stakeholders. Hotel managers should adapt governance and social investment strategies to local contexts, while policymakers need differentiated regional incentives. For investors, the interaction between governance quality and social responsibility proves critical for valuation. Theoretically, the research demonstrates that board size acts as a key contingency, moderating how social expenditures translate into financial performance across distinct tourism regions. Practical implications The study provides actionable guidance for hotel managers, policymakers, and investors by demonstrating that governance structures and social investments must be aligned with regional tourism models. Managers can optimize performance by tailoring board composition and social spending to local stakeholder expectations, policymakers can design differentiated regional incentives, and investors can improve valuation and risk assessment by jointly considering governance quality and social responsibility. Originality/value This paper contributes to the literature by combining corporate governance and social responsibility within a regional performance framework. The inclusion of interaction terms between board size and social expenses reveals how governance can shape the effectiveness of strategic spending. The regional focus adds depth to existing research on hotel performance and supports more targeted decision-making in tourism-based economies.