Skip to content

“SMEs’ Sustainable Development Challenges Post-COVID-19: The Tourism Sector” by Amal H.A. Mohammed (Fachhochshule Salzburg), article in “World Journal of Entrepreneurship Management and Sustainable Development”, published online: June 2021

This paper reviews the changes in the relationships between Small and Medium Size Enterprises (SMEs) in the tourism industry and sustainability dimensions (social, economic, and environmental) following the COVID-19 crisis. It offers some reflections on changes in the relationships between SMEs’ sustainable development in the tourism industry and sustainability. The paper describes how COVID-19 impacted several sectors in tourism (hotels, tour operators, restaurants) and reviews how the COVID-19 crisis is likely to negatively impact sustainable development efforts for SMEs in this sector. This exploratory review of SMEs’ sustainability challenges reveals that it might be harder to maintain or adopt any sustainable practices, whether social, economic, or environmental, under the financial stress and sharp decline of revenue resulting from the COVID-19 crisis. The paper is the first to investigate how the COVID-19 crisis might impact SMEs’ sustainable development in various tourism sectors. This review paper presents a theoretical outline of the crisis and opens promising research opportunities for enhancing our understanding of the changing relationships between sustainability and SMEs in the tourism industry. The paper fills the current gap in the literature in sustainable tourism challenges arising from the COVID-19 crisis and demonstrates the importance of governments and policy-makers supporting SME survival and the Sustainable Development Goals (SDGs). One of the aims of this paper was to review changes in the relationships between SMEs in the tourism industry and sustainability dimensions, social, economic, and environmental, following the COVID-19 crisis. On a social level, the tourism sector employs vulnerable groups such as women, migrants, seasonal and low skilled workers COVID-19 has worsened the situation of the vulnerable tourism workforce that already suffers from low salaries, lack of benefits and labour rights; it is also expected to reverse gender equality efforts and women’s empowerment in society. Economically, tourism SMEs worldwide reported a decline in revenue of up to 90% because of lockdown and border closures. The mass cancellations and refund requests left SMEs struggling with unsustainable debt burdens that forced many businesses to temporarily or permanently close, leaving millions of people unemployed. This has resulted in a rise in the unemployment rate and economy shrinkage, especially in developing and under-developed countries that rely heavily on travel and tourism, leading to an increase in poverty and loss of GDP. Environmentally, it is unlikely that any SME will adopt any new energy or water saving technology or environmentally friendly practices that require investment. It is still unknown where the huge amount of discarded non-recyclable waste resulting from COVID-19 measures will end up, especially in countries with no adequate waste management policies or treatment systems. The environmental impact of waste generated by COVID-19 has not yet been fully assessed but it is expected to be extensive. This exploratory review of sustainability challenges for SMEs reveals that it might be harder to maintain or adopt any sustainable practices within the social, economic, or environmental dimension under the current financial stress and sharp decline of revenue. With the argument that there is a conflict between sustainability and economic growth (Jones et al., 2014), SMEs are currently unlikely to make sustainability a priority without external financial aids or stimuli, such as increasing customer demand for sustainable products and services. SMEs’ focus post-COVID-19 will be financial recovery from the crisis and resuming economic growth; sustainability initiatives will only be of value if they are profitable, reduce costs or lead to benefits such as competitive advantage or tax reductions (Wiesner et al., 2018). Governments and policymakers need to be aware that sustainability development in a post- COVID-19 world should be built on a win-win situation and mutual benefits. The financial crisis that hit tourism may make entrepreneurs and business owners refrain from making additional investments in sustainability practices that do not bring economic benefits. SMEs that employ most of the workforce in the tourism industry must receive financial relief to keep them operating and curb rising unemployment. Governments need to follow similar schemes to the German government and offer SMEs additional benefits, such as tax deferrals if they adopt any environmental sustainability practices. Sustainable development post-COVID-19 might have slowed down but it is expected to recover over time, although faster in some sectors than in others. New studies suggest that the COVID-19 crisis and the resulting scarcity in some products and facilities will shift consumer behaviour to be more responsible and sustainable (Anker, 2021). Despite being the most affected and slowest recovering tourism sector according to EU data, it might be easier for tour operators to resume sustainable development since there are many cost-free practices that will enhance their contribution to sustainability development and improve their brand reputation as responsible companies. These include encouraging tourists to help local communities recovering from the economic crisis following COVID-19 by purchasing from locally owned shops and eating at local restaurants. Also, educating tourists about the local culture of the place they are visiting and raising their awareness of the challenges facing sustainable development in these destinations.