COVID-19 and the Resilience of Tourism Businesses in Portugal

COVID-19 and the Resilience of Tourism Businesses in Portugal

Teresa Gomes da Costa (Polytechnic Institute of Setúbal, Portugal), Maria de Lurdes Calisto (Estoril Higher Institute for Tourism and Hotel Studies, Portugal) and Jorge Umbelino (Estoril Higher Institute for Tourism and Hotel Studies, Portugal)
DOI: 10.4018/978-1-7998-6926-9.ch001
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Abstract

The pandemic of SARS-COV-2 has significantly affected tourism, and many tourism companies have seen their revenue significantly reduced. Thus, the question arises: 'How resilient are tourism companies to the COVID-19 pandemic (1st wave) effects on their activity?' This chapter presents the preliminary results of a broader research project: RE.COV.ER. Based on a sample of 1,075 tourism companies operating in Portugal, this study describes the impact of the pandemic's first wave on tourism companies and explores their resilience. Results reveal a high level of impact of the pandemic on tourism companies. In terms of resilience, most companies' managers are perceived as proactive, and many companies implemented mitigation measures. Even though half of the companies could not find effective responses to the situation, there is, however, one small group of companies that seem to be more resilient, suggesting the need for more investigation on the reasons why.
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Introduction

On March 11th, 2020, the World Health Organization declared the pandemic of COVID-19. The first concern of most governments and businesses was the safety of their citizens and communities. Travel restrictions and the lockdown of most non-essential businesses was the way to ensure that.

The pandemic affected several economic activities, and tourism was one of them. The decision to shut down hotels, restaurants, theme parks, and most attractions, as well as the travel ecosystem's full disruptive effect, caused a considerable impact on worldwide tourism. The airline industry, too, suffered enormous losses. To give some examples, on March 5th 2020, the British airline company FlyBe was the first to succumb to market pressure, announcing bankruptcy. Soon was followed by others, like Scandinavian Airlines and Virgin.

With international air travel quickly decelerating, many countries enforcing travel prohibitions, closing borders, or introducing quarantine periods, international and domestic tourism dropped abruptly. All this had no precedent. In just a few months, the global tourism system moved from over-tourism (Dodds & Butler, 2019; Seraphin et al., 2018) to non-tourism.

All over the world, the pandemic affected all parts of the tourism value chain. The impact of cancelled events, closed accommodations, and other locked-down attractions impacted other parts of the supply chain, such as catering and laundry services. Restaurants, too, were affected. Some closed, others were able to switch to take-away/delivery sales, continuing their operations, at least partially. Layoffs and bankruptcies resulted from this situation.

In Portugal, the scenario was no different. According to the National Statistics Institute (INE), the hotel sector recorded a 63% decrease in overnight stays in 2020 (around 26 million Euros). In January of 2021, according to the Portuguese Hotel Association (AHP), 80% of hotel units were closed, and the recovery of the sector was not foreseen until 2024.

According to Banco de Portugal (BP, 2021), the Portuguese national bank, in 2020, the expectations considering the impact of Covid-19 were negative or very negative in terms of turnover associated with the reduction in orders/customers (59%) and the new vírus containment measures (56%). These percentages increase to 84% and 82%, respectively, among lodging companies and restaurants. At least 50% of hotel companies and restaurants benefited from some measure offered by the Government during 2020 (BP, 2021). Most beneficiary companies consider these measures important.

Despite the difficult times tourism companies faced in 2020, some struggled to remain open and mitigate losses. COVID-19 pandemic is not the only type of disaster situation that tourism companies faced in the past, and the literature reveals that in previous situations, many companies recovered. This chapter will discuss tourism companies’ resilience and how they responded to the COVID-19 situation.

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