Family Business Tourism Risk in the Context of Coronavirus Pandemic

Introduction

The coronavirus outbreak has paralysed the world economy. However, the economic impact of the pandemic differs greatly between various sectors of the economy. The impact and recovery potential depend, among other things, on the economic structure of each country, for example, those with a large number of small and medium-sized enterprises (SMEs) are more affected by the crisis (EC, 2020a). In that context, the exfoliation of the recession facing Europe is huge. For millions of Europeans, this will be a life-changing year. Never before, except in wartime, have whole industries lock down and raised up new problems so fast (McKinsey Global Institute, 2020a). It appears that the most affected economies are the ones highly dependent on tourism. Namely, this novel coronavirus (SARS-CoV-2), that causes COVID-19, is putting the tourism industry under unprecedented pressure. Within months, global tourism had shifted from over-tourism to non-tourism.

More precisely, five years prior to 2019, the tourism sector was responsible for one in four of all net new jobs created globally (WTTC, 2020a). Last year one in ten people worked in travel and tourism-related jobs (World Economic Forum, 2020), contributing with $8.9 trillion and generating 10.3%, to the global economy (WTTC, 2020a). That was before current pandemic crisis. While many popular destinations are cautiously welcoming visitors again, the industry is continuing to lose jobs and revenues. A huge drop in tourism will have a major influence on countries that depend on the tourism industry and could have large-scale effects on their national gross domestic product. The United Nations World Tourism Organisation (UNWTO, 2020) estimated in May that the number of international tourists could fall by 60 to 80 per cent in 2020 and that some 197.5 million jobs could be lost in this sector.

When it comes to European Union, tourism represents the third largest socioeconomic activity in the EU after the trade and distribution and construction sectors (EC, 2010). Moreover, taking into account the sectors linked to it, tourism's contribution to GDP is even greater (EC, 2010). Besides, tourism is the fourth largest EU export category and brings spill-over benefits to the European economy as a whole: 1 EUR of value added generated by tourism results in additional 56 cent of value added in indirect effect on other industries (EC, 2020b). Because of that, Europe was confronted by a public health challenge that quickly became the most drastic economic crisis in its history (EC, 2020c). With its long-term vision, governance and values-driven strategy, the family businesses can be role model for the global solution.

In that context, the importance of family businesses is unquestionable. Thus, what is clear beside that family businesses represent a vital part of the economy, are the implications that involve their commitment to local communities, the long-term stability they bring, the responsibility they bear as owners and the values they stand for (EC, 2009:22). The covid outbreak has led to major revenue drops for most of small and medium sized enterprises and threaten their survival. While at the same time the majority of global employment is depending on the pace of recovery of small and medium-sized enterprises, the future of the global economy will very much depend on how SMEs manage to get through and emerge from the crisis (ITC, 2020). Hence, it is important to analyse the environment in which family businesses operates. For countries such as Spain and Italy, the contribution of tourism to their GDP is even higher than the global average, 14.3% and 13.0% of their GDP in 2019, respectively (WEF, 2020). In Croatia for example, it contributes with around 20% to GDP, confirming the economy's high reliance on the tourism sector, which makes it particularly vulnerable to external shocks (Orsini and Ostojić, 2018). Therefore, this paper analyses the family business’s tourism risk in the context of coronavirus in the European Union and introduce the latest trends in tourism, with emphasis on family businesses. According to the results of the conducted analysis, unlike other industry sectors, the loss of tourism revenue resulting in major economic and job losses followed by an uncertain future in the sector, particularly for family businesses and tourism related stakeholders. It is important to be analysed because family businesses think about next generations, succession and legacy in accordance with longevity improves prosperity. When well governed and operating with long-term perspectives, possesses the right competences for developing a resilience business models. Therefore, we ask: How family businesses (un)successfully deal with the crisis, and what future generations can learn from the crisis?