The tourism industry is one of the important contributors of a successful economy. However, there are different factors that influence the industry’s susceptibility to various crises. The challenge of sustaining a tourism firm can range from its internal to external environment that provides different challenges. Particularly, small tourism firms are highly affected by these factors that make them vulnerable when one or more crisis factors occurred. The purpose of this writing is to discuss such factors that make small tourism firms highly susceptible to crisis compared to larger tourism businesses. Different factors such as environmental and economic susceptibilities will be presented in relation to the small tourism firms’ current and future performance within the tourism industry. This paper argues that despite the susceptibility of the small tourism companies, such challenges can be addressed through proper application of strategies in order to sustain their competitiveness and profitability in the industry.
The tourism industry plays important roles when it comes to the development of both the local and national economy. Specifically, the small-scale tourism companies, otherwise known as the small tourism firms contribute to the local economy where they are located. However, similar to other industries, tourism is also vulnerable to crisis that may reduce its profitability. In fact, it now globally accepted that these small tourism companies, which are part of small and medium enterprises (SMEs), contribute to different nations’ economy (Breen et al., V). However, it is not always that the industry is able to sustain itself despite different economic and environmental issues. If large tourism firms are highly susceptible to various crises, it is presumably correct that such events also adversely affect the small tourism firms. It is because, these small companies normally have limited resources when it comes to sustaining itself against crisis, such as limited staff, small-scale business planning, smaller financial capacity, and even limited management plans. Relatively, Campiranon (3) said that there are factors that influence the crisis vulnerability within the tourism industry.
The perceived risks are one of the factors that were mentioned, which states that the potential customers’ perception towards the risks affects their decision-making. Simply put, the higher perceived risks by the potential customers, the lower the demand can be. This applies especially when the small tourism firms is located or offers tourist destinations in high-risk places. In addition, the characteristic of tourism is another factor that makes it vulnerable to crisis, unlike, other tangible products that can be recalled in the event of unsatisfactory outcome, tourism is more on services that are intangible and unperishable. Therefore, in the event that customers have experienced unsatisfactory services, reversing the outcome is very little to none. Crisis in tourism industry is normally unpredictable and crisis management is another factor that contributes to the susceptibility of small-scale tourism companies. The structure of these firms are not similar with big corporations that normally have well-structured organizational structure, which enables them to hire or create a separate group that will focus on crisis management. On the other hand, small tourism firms are normally sole proprietary business, from which the person who owns the firm is the same person who manages the overall operation. Which is why, it is essential that small tourism companies are well-prepared, despite their limitations when it comes to addressing the crisis.
One of the good things about operating a small tourism firm is its ability to operate even in rural areas. In contrast with bigger tourism firms that mostly operate within a central business district, small tourism firms are flexible enough when it comes to choosing an area for its operation. However, this does not mean that such location is free from any challenges. Another good reason that small tourist firms are susceptible to crisis is that a large scale disaster could directly affect small business such as these firms (Irvine and Anderson 229). Therefore, visitors might cancel their existing tour in such areas that are affected by disasters. There are many events that could affect the small tourism firms as it is considered a fragile industry (Maditinos and Vassiliadis 67). Being fragile in the industry where these firms operate can be affected by various events, such as wars, disease outbreaks, economic fluctuations, and terrorism. Which is why; many researchers have noted that an increase in crisis affect the tourism industry, especially the small tourism firms.
As previously mentioned, many small tourism firms have limited resources, especially when it comes to financial aspect. In this case any economic changes also make these firms susceptible to crisis. The adverse effects of crisis are evident through different channels of consumers’ consumption. One of which is the publics capability to purchase products and services from various firms during the time of crisis. To simply put, lack of consumers’ financial capacity means a decrease in demand in tourism. People tend to reduce their spending during the time of crisis. Thus, such spending may include their frequency of leisure travel.
The challenges of small tourism firms are recognized in the tourism industry. The challenges that contribute to their susceptibility include their vulnerability to cash flow issues, inadequate scale in relation to marketing expenditure support, limited management and financial resources, and even the firms’ difficulty in meeting business and regulatory requirements (University of Massachusetts Lowell 23). The characteristics that small tourism firms have are almost similar to one another, such as a family-operated business, only one person manages the overall operation of the business, lack of adequate planning, the requirement for financial and cost management, and the numerous requirements that they have to meet. This type of business mainly focuses on the people and the factors that influence their decision-making. An event that can minor affect the large businesses could mean a major disaster for small tourism firms (Trasca 1270). It is presumable that the size itself is one of the major reasons that it is susceptible to crisis. Thus, despite the acceptance that crisis management is essential for sustaining small tourism firms; limited knowledge is also another reason for the small firms’ susceptibility (Pantelidis 184). However, many scholars believe that the size of firms should not be the reason for being susceptible to crisis. In fact, many small firms in from different industry were able to overcome the challenges and crisis through application of various strategies.
Crisis management is not just a single model, as it can be developed in accordance to its use in order to maximize its benefits. Even small companies can use and develop different crisis management models to make them ready for any potential crisis. A systematic way of managing crisis may include 1) Pre-Event, 2) Prodromal, 3) Emergency, 4) Intermediate, 5) Recovery, and 6) Resolution stage (Zhukov, Sardo, and Ullah n.p.). Generally, these stages are considered some of the strategies that can be utilize by small tourist firms to reduce its susceptibility to crisis, hence, reducing the crisis’ effects to the sustainability of the business.
There are many factors that make small tourist firms susceptible to crisis. Environmental and economic crisis affect almost all businesses across different industries. That is why, effective strategies must be employed in order to reduce the crisis’ impact as such crises are constant challenges in every business.
Works Cited
Breen, John P. Small and Medium Tourism Enterprises: The Identification of Good Practice. Gold Coast: Sustainable Tourism CRC, 2005. Print.
Campiranon, K. "Factors influencing crisis management in tourism destinations." Crisis management in tourism (2008): 142-156. Print.
Irvine, Wilson, and Alistair R. Anderson. "Small tourist firms in rural areas: agility, vulnerability and survival in the face of crisis." Int Jrnl of Ent Behav & Res 10.4 (2004): 229-246. Print.
Maditinos, Zissis, and Christos Vassiliadis. "Crisis Management in the Tourism Industry: Happen Locally - Affected Globally." (2008): 67-76. Print.
Pantelidis, Ioannis S. The Routledge Handbook of Hospitality Management. London: Routeldge Taylor and Francis Group, 2014. Print.
Trasca, Daniela L. "The Consequences of the Economic Crisis on Small Companies from Romania." Procedia Economics and Finance 23 (2015): 1266-1272. Print.
V. Zhukov, Dmitry, Chiara Sardo, and Asad Ullah. "A conceptualized model of crisis management for small hotel companies." ijied 1.5 (2015): 53-61. Print.
