The tourism industry is highly vulnerable to natural and human-induced crises. Tourism is mostly influenced by external factors that firms have no control over such as the government, economy, and climate which puts the industry at high risk of crises (Anderson, 2006; Berbekova et al., 2021). Furthermore, tourism operates through the interaction of a complex network of stakeholders which means that more people are exposed to hazards in the industry, thus increasing its level of vulnerability (Anderson, 2006). The inevitability of crises in the tourism industry has made resilience and sustainability of particular interest in tourism literature (Bhammar et al., 2021; Carty, 2021; Tyrrell & Johnston, 2008). Tourism, in general, constantly faces multiple hazards but the impacts of these stressors are more amplified in small island settings. Several studies in tourism management literature specifically look at tourism businesses in small island destinations—how their unique settings influence their ability to build resilience and sustainability (Bangwayo-Skeete & Skeete, 2021; Guden et al., 2021; Moghal & O’Connell, 2018).
Small island tourism is usually nature-based due to the abundance of natural resources found on these islands. Furthermore, locals in small island destinations rely heavily on tourism for their livelihoods (Agius et al., 2021). Its greater dependence on the natural environment in contrast to other forms of tourism puts small island tourism at higher vulnerability to climate change. Adverse impacts of climate change such as sea level rise present risks to the tourism industry as they damage the natural environment and other tourism infrastructures which then puts rural homes and livelihoods at stake (Moghal & O’Connell, 2018). Small island tourism also suffers from a lack of financial resources, economic dependence to other geographical areas, and limited connectivity/accessibility which hinder them to develop sustainable tourism within their locality (Guden et al., 2021; UNWTO, 2014).
Large tourism businesses operating in small islands are assumed to have a better capacity to respond to the aforementioned challenges. Large firms have more financial resources that allow them to respond to crises more quickly and absorb crisis shocks better (Cushnahan, 2012; Öberg, 2021; Pal et al., 2014). However, most tourism businesses in small islands are composed of small family-owned firms. Small firms have limited resources but are known to be more flexible when reconfiguring their resources (Mahmud et al., 2020). Small family businesses have a different set of dynamic capabilities compared to large firms and therefore, they exercise different crisis management strategies and have a different level of resilience. The liability of smallness requires them to develop their capabilities for their survival and growth.
Dynamic capabilities and resilience are often linked with each other yet there is limited knowledge of how resilience is built (Jiang et al., 2019; Van Der Meer, 2012). The dynamic capabilities perspective seeks to explain how organizations achieve and maintain better organizational outcomes through adaptation and flexibility which reflect alterations in their operating environment (Teece et al., 1997). Furthermore, there is currently no literature that examines the resilience of small family-owned tourism businesses in small island destinations on the basis of dynamic capabilities. Previous studies on family businesses in the midst of uncertainty focus on entrepreneurial orientation (Zellweger & Sieger, 2012), resilience practice (Conz et al., 2020), long-term orientation (Lumpkin & Brigham, 2011; van Essen et al., 2015), innovation and resilience (Campopiano et al., 2019), business strategies and resilience (Acquaah et al., 2011), and determinants of firm resilience (Brewton et al., 2010). In times of environmental disruptions, firms try to survive by utilizing their capabilities to absorb and reduce shocks (Lengnick-Hall & Beck, 2005). Current studies overlook how resilience is built through the capabilities that family businesses acquire and develop within their operating context.
To address the aforementioned limitations, this study aims to understand the crises experienced by family-owned accommodation businesses in small islands and how resilience is built alongside the development of their dynamic capabilities as they manage crises. Family business survival depends on building their capability to recognize, adapt and transform, embrace change, and promote long-term sustainability (Ates & Bititci, 2011; Folke et al., 2010). We frame our study in the context of three small islands in the Philippines, namely, Boracay, Negros, and Siargao. These areas are vulnerable to typhoons and seasonality and are dominated by small-scale businesses. Therefore, the results of this study could be generalized to small-scale family-owned tourism businesses in small island regions. Furthermore, this study provides a perspective on how resiliency is built within the accommodation sector.
This study makes several contributions to research and practice. First, this contributes to tourism and hospitality research by interpreting resilience from a dynamic capability perspective in family firms. Dynamic capabilities enable continuous adaptation amidst disruptions through the reconfiguration of resources (Helfat & Winter, 2011). Our articulation of how resilience is built adds value to resilience theory and practice, as the accommodation industry lacks a globally accepted resilience framework (Pennington-Gray, 2018) and tourism literature remains unclear as to how resilience can be conceptualized (Hall et al., 2017). Second, this study serves to answer the call for contextualizing family business research (Samara et al., 2021) in a small island context. This study shows how small family-owned accommodation businesses navigate through crises and develop their resilience capabilities in small islands, which are challenging for businesses to thrive due to their limited resources and territories and small market share (Dana & Morris, 2011). Few studies have also focused on resilience of family-owned businesses and how they manage crises, which are all critical to their survival and continuity (Calabrò et al., 2021; Conz et al., 2020). Moreover, according to Booth et al. (2020), there is scant focus on tourism and hospitality entrepreneurship research on islands. Third, this study is useful for practitioners as we have identified how family-owned accommodation businesses navigate their way through crises experienced in small islands, which can be vital for new ventures in the same context.
The following section presents our conceptual framework and extant studies followed by a description of our research methodology. Our findings present a description of crises in the small islands, crisis management in family businesses, and dynamic capabilities in building resilience. Thereafter, we discuss how family-owned accommodation businesses build their resilience, and finally, we provide practical implications and directions for future research.
Theoretical framework and related literature
Dynamic capabilities perspective and resilience
Dynamic capabilities refer to the firm’s ability to reconfigure its internal and external resources to be able to adapt to the demands of its changing environment (Teece et al., 1997). Dynamic capabilities can be disaggregated into three sequential areas: sensing, seizing, and transforming (Teece, 2007). Sensing refers to the assessment of opportunities and threats; seizing refers to mobilizing resources and competitive advantage to address opportunities and threats; transforming refers to the reconfiguration of resources used in operations (Helfat & Martin, 2015; Matysiak et al., 2018; Teece, 2007). Dynamic capabilities evolved from the resource-based perspective which states that a firm’s performance is predetermined by the resources it has at its disposal (Teece, 2007). Dynamic capabilities in contrast argue that firms have the ability to transform and innovate which implies that a firm’s performance is largely influenced by its capacity to learn and how it applies its learnings in its decision-making (Ambrosini & Bowman, 2009; Teece et al., 1997). A study by Ambrosini et al. (2009) emphasizes the importance of dynamic capabilities in strategic management as businesses must always be evolving to be able to maintain their competitive advantage in the long run. Dynamic capabilities are also important in crisis management as they help firms cope better with environmental uncertainty and improve a firm’s flexibility and rationality which positively influences its response to crises (Haarhaus & Liening, 2020)
Similarly, resilience, at an organizational level, refers to the quality of a firm’s response to a crisis and its ability to bounce back to normalcy (Boin & van Eeten, 2013; Williams et al., 2017). However, the concept of resilience is more often used in disaster management literature to discuss community experiences during and after natural disasters (Moreno et al., 2019; Uddin et al., 2020). In tourism literature, the resilience of tourism businesses is described by their ability to survive, adapt, and innovate (Dahles & Susilowati, 2015). A study by Biggs et al. (2012) shows that the resilience of tourism businesses is determined by various factors, including their financial resources, social capital, government support, and lifestyle benefits tourism operators gain from operating their businesses. Several characteristics of resilience overlap dynamic capabilities. On the one hand, Van Der Meer (2012) proposes that resilience can be considered as a dynamic capability. On the other hand, dynamic capabilities can also provide a mechanism to understand how resilience is built (Jiang et al., 2019).
A family business refers to an organization where members of a family or coalition of families hold top positions (e.g., CEO), exercise management control, and hold the majority of shares in a business (Villalonga & Amit, 2004). Ownership and management of a family-owned business are distributed across multiple generations of the same family or group of families to ensure the survival of the business in the long run (Chua, 1999). Family businesses operate through different dynamics which may be non-existent in non-family businesses. Emotions significantly influence the dynamics of a family business (Zehrer & Leiß, 2019) which makes clear communication, distinct vision, and strong commitment even more crucial (Chua, 1999; Zehrer & Leiß, 2019). Furthermore, family businesses tend to have lower sales growth than non-family businesses because they focus more on growing their long-term investments such as employee growth (Moreno-Menéndez & Casillas, 2021). These characteristics imply that family businesses have greater socioemotional wealth and higher value for sustainability which can be used as sources of competitive advantage for businesses in the hospitality industry (Chua, 1999; Dębski & Sułkowski, 2019; Schellong et al., 2019).
These characteristics can also be advantageous for family businesses when facing crises. The high socioemotional wealth of family businesses fosters honest and reliable communication within the organization which then positively influences tourists’ and employees’ perceptions during crises (Schellong et al., 2019; Schwaiger et al., 2021). Employees of the family business also have stronger commitment to work which increases the business’ ability to adapt, innovate, and recover after crises (Engeset, 2020). The findings of Schwaiger et al. (2021) also showed that owners of hospitality family businesses generally have a positive outlook when faced with crises which allows them to react immediately to shocks and thus, increases their resilience.
Sensing pertains to the capability to identify threats and opportunities (Teece, 2018). Faulkner (2001) presents a crisis management framework for the tourism industry and emphasizes the importance of analyzing past crises to develop a preparedness plan which could contribute to the resilience and sustainability of tourism businesses. Businesses that have experienced a particular type of crisis are expected to be better equipped to face a similar event in the future, assuming that they have gained knowledge from this experience (Faulkner, 2001). Transfer of knowledge is important for organizations to be able to store and retrieve information gained from previous experiences and reflect these on new strategies to be implemented in crisis preparedness plans (Blackman et al., 2011). In this sense, organizations act as bodies that integrate knowledge coming from different individuals to continuously build their competitive advantage (Grant, 1996). However, this implies that a lack of experience in dealing with crises may lead to neglect of crisis preparation. In a study by Ghaderi et al. (2021), a lack of preparation among hotels was attributed to properties being located in relatively safe areas which potentially put these businesses at a high level of vulnerability. This also confirms the finding of Kovoor-Misara (1996) which states that the level of crisis severity that an organization has experienced determines its inclination to prepare for future adversities.
Seizing is the ability to recognize strategically relevant information from the environment to refine and design business models and commit resources (Teece, 2018). Tourism development tends to be regionally disparate and unbalanced due to geographical differences (Wang et al., 2015). Thus, the level of vulnerability in tourism organizations varies across different regions (Sun et al., 2021). Crises in the tourism industry can also have long-term effects on local communities. Tourism may potentially increase social vulnerability, especially in rural and remote areas where a significant portion of the local population mainly depends on the tourism industry for livelihood (Lorenz & Dittmer, 2021). Existing literature has determined important factors in reducing vulnerability and building resilience in the tourism industry. Firstly, financial resources are a critical determinant of an organization’s capability to cope with crises. A large financial base acts as a buffer or absorber of crisis shock and thus allows businesses to be more flexible in their crisis response and even has the potential to eliminate crisis per se (Duchek, 2020; Pal et al., 2014). Secondly, crisis management relies on human resources since crisis response activities such as environmental scanning and strategizing all require labor (Duchek, 2020). Debt is also a determinant of a tourism business’ quality of crisis management, though innovative firms are seen to handle crises better regardless of the level of debt (Nemlioglu & Mallick, 2021). Differences in the scale of businesses also result in varying approaches to crisis management. According to Öberg (2021), large firms tend to be better at adapting to crises but are more passive in financial support while small organizations are more innovative and often initiate changing their business models to adapt to the situation. Large firms have more resources to dispense which allows them to readily respond to crises (Cushnahan, 2012). However, small to medium enterprises (SMEs) are generally more committed to learning, and the more that they invest in learning, the more innovative they are (N.K. Saunders et al., 2014). Based on a framework developed by Broshi-Chen and Mansfeld (2021), being innovative is advantageous in developing crisis management strategies as this enables flexibility in decision-making.
Transforming is realigning the business structure and existing capabilities and investing in additional capabilities (Teece, 2018) to prepare for future crisis. Post-crisis recovery in the tourism industry has become a great interest in the crisis management literature due to the impacts of the COVID-19 pandemic on tourism globally. Government bodies in every country are responsible for rebuilding tourist confidence to travel and preparing for a sustainable revival of the industry (OECD, 2020). Governments also play a crucial role in distributing transparent information and providing financial assistance to tourism businesses to ensure the survival and recovery of their local tourism industry (Yeh, 2021). At the organizational level, the ability to transform one’s services and diversify delivery platforms is important for ensuring the recovery of the business (Fountain & Cradock-Henry, 2020; Raki et al., 2021).
Also, the tourism industry has always been reliant on marketing, so strategies for rebuilding brand image have become a major focus in the post-crisis recovery of tourism businesses (Avraham, 2016). Destination image determines a customer’s perceived value of tourism which then influences their inclination to travel. Studies by Croce (2016) and Rasoolimanesh et al. (2021) found that destination image positively influences tourist confidence and intention to travel which can then be used to predict tourism productivity. Customer confidence is important for the survival of tourism businesses and is a great indicator of the recovery of the tourism industry after a crisis (Gurtner, 2016). During and even after crises, safety becomes a priority for tourists which makes it imperative for tourism businesses to initiate service transformations to implement safety measures to rebuild tourists’ confidence to travel (Berry et al., 2020) which will then ensure the survival of tourism.
The study uses a qualitative approach to gain a better understanding of the resiliency of family-owned accommodation businesses through the development of their dynamic capabilities pre-crisis, during a crisis, and post-crisis. The study focuses on the experiences of family-owned accommodation businesses operating on three small islands in the Philippines. The 18 research participants are composed of resorts, hostels, homestays, and Airbnbs in Boracay, Negros, and Siargao. These three islands were chosen as they are considered among the top island destinations in the Philippines. The respondents’ profiles are shown in Table 1. Most of the businesses are small-sized and around 44% have been operating for more than 10 years. Purposive (those that are family-owned) and snowball sampling were used to gather the participants. Several businesses were contacted through digital means (e.g., email, social media) and those that responded and agreed to participate in the study were invited for interview.
Semi-structured in-depth interviews were conducted from June to July 2021 through one-hour online video calls, phone calls, and written interviews. Interviews were carried out until thematic saturation was reached. Questions were divided according to the three phases of crisis management: pre-crisis, during-crisis, and post-crisis. The three areas of dynamic capability—sensing, seizing, and transforming, were explored in each phase from both internal and external perspectives. The interview guide was reviewed by two industry experts and two experts in qualitative research and was also pre-tested to one hotel owner. The anonymity of the participants’ identities was ensured when treating the data collected. The interviews were transcribed and coded in NVivo to identify emerging subthemes through a thematic analysis.
Crises in small islands
The geographical location of the Philippines puts the country at constant risk of typhoons and earthquakes. An average of 20 typhoons hit the Philippines each year and usually make landfall in the Visayas region (Santos, 2021). Boracay and Negros are both located in the Visayas region while Siargao lies just below Eastern Visayas. The three islands are also surrounded by earthquake hazards such as active faults and trenches. Among the three islands, participants from Siargao mentioned that they experience more earthquakes compared to typhoons. Siargao is surrounded by the Philippine Trench and Philippine Fault from its east and west respectively.
Several typhoons hit the three islands every year especially during the months of June to September due to the southwest monsoon or habagat. During these months, some businesses experience low season due to a decline in bookings in comparison to other months. Nonetheless, none of the participants have experienced having zero bookings due to typhoons. Businesses consider typhoons as normal events but the power outages they cause are what impact businesses adversely. For example, Typhoon Haiyan knocked out electricity in Boracay for two to three weeks according to one of the participants. Power outages are a major crisis because these interrupt business operations, incur additional costs, and affect customer experience. Furthermore, power outages are also caused by the lack of electricity supply in these islands. All participants from the three islands experience scheduled power outages that last for a few hours to days almost every week due to ongoing developments being done by their local electric companies. Aside from power outages, participants in Siargao also frequently experience water shortages but these are not considered much of a crisis compared to power outages. Natural calamities that occur in other parts of the country also impact the tourism business in the three islands as this affects the volume of incoming tourists. For example, when the Taal Volcano in Batangas province erupted in January 2020, a participant mentioned that they experienced a decline in tourists in Boracay which had just recently re-opened from its rehabilitation closure then.
The Boracay rehabilitation that started in 2018 and lasted until 2019 is a great example of a human-made crisis. During the Boracay rehabilitation closure, the national and local governments imposed new regulations for tourism businesses in Boracay. Various new licenses and certifications (e.g., fire safety clearance, waste pollution officer certification, etc.) were new requirements imposed on businesses for them to be able to continue their operations. These added loads of paperwork for the businesses and cost them time and money as each requirement took weeks to process and cost thousands of Pesos. One respondent shared that they processed about 35 permits during the pandemic closure just to be able to keep operating their Airbnb.
In 2020, the outbreak of the COVID-19 virus caused a nationwide lockdown which became the biggest crisis in the tourism industry according to the participants. Due to the lockdowns during the pandemic, hotels, resorts, and Airbnbs had to shut down as international and local travel became restricted. Tourism businesses lost their clientele and did not generate income for several months. Travel restrictions eased and tourism started reopening in 2021 but the government has implemented new regulations for tourism businesses and tourists to follow. These new barriers incurred additional costs for businesses and more effort for tourists to be able to travel, especially to small island destinations which are only accessible to non-locals through air travel. According to the participants, they are still not profiting the same as they did before the pandemic even if they managed to stay in operation.
Dynamic capabilities in family businesses
Sensing: The aforementioned crises—from earthquakes to COVID-19—are all disadvantageous for the accommodation sector. However, participants still identified advantages that these crises have brought to their internal organizations. More disadvantages were mentioned with regard to human-made crises, especially in relation to their experiences with COVID-19. Business owners have a difficult time planning for the long term due to the pandemic’s unpredictability in comparison to crises such as typhoons, earthquakes, power outages, and water shortages which they have already adapted to and have known solutions for. Participants take advantage of crises to learn more about what can possibly occur in the future. This helps them become more flexible in their planning. Crises also give them the opportunity to develop their internal resources so they can prepare better for future crises that may occur. Participants prepare for crises by developing their infrastructure, financial resources, and lines of communication. Businesses invest in equipment such as windshields that can protect their roofs from strong winds during typhoons and electric generators to keep their amenities operational even during power outages, as some informants stated
When a typhoon is coming, especially if there will be a heavy rain, then we have to make sure that our roof is well maintained or we have a temporary sealing of the roof. We have to make sure our tank[water] is already filled up just in case there will be power outages because our water source is pumped from deep well. (A8).
One participant also mentioned that adding amenities such as a swimming pool can help attract more customers which can help recover profit losses faster after a crisis since they can charge higher fees, as seen in the following quote:
I’m considering building a swimming pool. Building a swimming pool with would allow me to charge more for the rental. And that extra charging may be a way to recuperate some of the losses. (A1)
Another participant opted to build multiple villas instead of one large hotel building so it will be easier to liquidate in case they have to sell their property in the future. Most participants also emphasized the importance of having emergency income and enough cash flow to prepare for unforeseen crises. One participant recommended that businesses stay away from debt and investments that have no ‘safety net’ to prevent instances where they could not afford to pay, as seen below:
As a small [business], you are limited in your capital and there are time limits. Everything we’d already planted wasn’t really limited, but we do not believe that small businesses should try [to get debt] to get anything done. If you try and get debt, this pandemic just small, medium-sized business, even though the largest resort here… You can’t go through without a lot of revenue or this many months and continually not see any future and expect to continue to operate, unless you plan, if you have more debt, you’re not living off this. (A6)
Small businesses also have limited human resources, thus, they place importance on employee training to help minimize labour costs as their staff gain skills to handle multiple tasks even beyond their position which eliminates the need to hire more people. Participants also ensure that they are always well-informed of current situations and that they relay information to their employees by conducting regular staff meetings. Social media acts as an accessible source of information for the participants. Most of them get updates from the official Facebook pages of local government offices and social media groups of local tourism associations wherein fellow business owners are members. Participants of Siargao were active in reaching out to their local government because they know that their local tourism office is accommodating.
Apart from providing news and updates, the government also supports the accommodation sector by providing free employee training, loans, and marketing support. Participants actively attended training offered by the government, especially during the pandemic when businesses were mostly idle. Most of them preferred not to take out loans from the government during the pandemic as this would only accumulate debt for the businesses. Businesses also benefit from the marketing activities of their local government unit. One respondent mentioned that their local tourism office mapped all hotels and homestays on the island to use for marketing. Local tourism officers in the islands are also active in visiting and monitoring businesses to ensure that they are following standards. However, participants also consider the government as a hindrance. The tourism regulations that are being implemented by the government are always changing, especially during the COVID-19 pandemic. This makes it difficult for businesses to plan for the long term. Businesses also support each other even when they are competitors by referring their guests to another resort, hostel, or homestay when they have no available rooms to offer. On the contrary, businesses operating as Airbnb prefer not to cooperate with other stakeholders as the Airbnb platform eliminates the need to do so. One participant who operates an Airbnb also mentioned that they can easily shut down their business when it gets difficult to run it. Moreover, as family-owned businesses, they have a lean organizational structure that allows them to ease in preparing and implementing changes, as stated below:
We’re small and adapt very quickly … We’re very agile. Decisions can be made quite fast. If investments need to be done, then we can decide right away. We don’t need to go over whole structure, organizational structure that has to approve what needs to be discussed. (A10)
Seizing: During a crisis, social media remains the most accessible source of information. Participants actively monitor posts from the official Facebook pages of relevant government offices and agencies. They also actively share information with associations they are part of which enables members to immediately learn about the environmental situation in other parts of the island during crisis events. During the COVID-19 pandemic, participants also kept themselves updated with announcements from national government agencies by reading reports online and watching television news. Participants whose businesses were in isolated parts of the island only used social media as their source of information during a crisis but the unreliable Internet connection in their area presents a handicap for them. The owners and managers take it as their responsibility to gather information about the environmental situation during a crisis event. After understanding the situation, they conduct staff meetings to relay the information to their employees and form plans with them on how they should respond to the crisis. In remote areas, the staff usually live near the business property so owners/managers can reach their employees easily in case there is no available Internet connection during a crisis event. Participants were not only concerned whether their employees are aware of and updated with the news but also ensured that their staff are physically safe during a crisis.
Some businesses let their staff stay in-house to keep them safe during a crisis while some let their employees take leave when their employees do not feel safe to come to work. Although participants place great value in their staff, most of them had to lay off their employees or cut their staff’s salaries during COVID-19 since their businesses could no longer afford to pay wages. Smaller businesses that have fewer than five employees were able to sustain their employees. Employees of these smaller businesses have always been capable of doing multiple tasks which kept them productive during the pandemic even when there were no guests.
Businesses also took the opportunity to focus on making repairs and renovations in their properties which kept them busy during the idle months caused by the COVID-19 pandemic. As one participant stated, “We are renovating our [rooms]. Everybody will paint, renovate” (A15).
Some also started other activities such as farming and gardening in the undeveloped lands in their properties. However, income from their tourism businesses was still not profitable. The negative cash flow from their businesses was insufficient to sustain their operations especially if the pandemic extends longer. Apart from wages and continuous utility bills, sanitation equipment required to abide by the government’s health protocols incurred additional costs for the businesses. Participants had to realign their budget allocations and cut down their operational costs. Most of them had to pursue other opportunities or change their business models to be able to sustain their tourism businesses during the pandemic. Some participants have other livelihoods and businesses in other industries which allowed them to sustain their tourism business during the pandemic. For example, one participant also operates a real estate business. Some started other businesses but remained in the tourism industry. One participant opened a bar and café and operated these along with their hostel. Another participant changed their business model from being a traditional accommodation to a long-term homestay for professionals working remotely. They also acted as consultants and made partnerships with other businesses that wanted to adapt their business model. During the pandemic, businesses lost their foreign clientele and had to shift their focus to the local market, as stated below:
In terms of local, it’s my wife, really. Do what the Filipino would want. She changed our model. And she got us on Facebook. She created a whole marketing campaign on Facebook so that we can reach the marketplace with who we work. She created dynamic marketing campaign, which really hit people … That’s why we have not lost tremendous amount of revenues this last quarter, because as she changed that model and as we grew locally and [through] word of mouth, after that, we really haven’t dramatically lost revenues. (A6)
Businesses that had just started operating a few months before or during the pandemic were more flexible as they did not experience profit loss per se. They were able to adapt to the crisis quickly. One participant had hired a chef so they can establish a restaurant in their resort since there are very few bookings, as seen in the following quote:
We hired him, a Master chef for the restaurant, then everybody said you’re crazy. You can’t hire a chef when there’s a pandemic and there’s no customers. So what happened? Everybody comes here to eat. They come here and eat because they know they can get good food. (A11)
Another participant improved their marketing on social media—they started publishing stories or short video clips on Instagram which appealed to the locals. They were not utilizing social media as much before the pandemic because they were focused on foreign tourists, however, now that they needed to focus on the local market, they found that Filipinos are very active on social media. Some also invite content creators such as vloggers to visit their island and stay at their resort or hostel and make promotions for their business. Social media acts as a powerful marketing tool in the tourism industry but it also serves as a platform to monitor the perceptions of tourists.
Participants always read reviews and comments posted online about their guests’ experiences. They use these to improve their service quality and explore the needs of tourists. They are also active in replying to negative comments to clarify misunderstandings and prevent further negative perceptions. Aside from social media, participants always practice getting feedback from their guests upon check-out. Most participants also treat their guests more personally. They interact closely with their guests to understand what they need. They would also give tour recommendations or accompany their guests on their travel activities. One participant operates a diving resort so they would often dive together with their guests. Participants were also generous in giving discounts to their guests and use this as a strategy to build customer relationships. However, during the pandemic, the customer relationships they have built and other business partnerships they have established in the past have declined. Most participants have realized the value of social media and improved their digital marketing skills during the pandemic. They find that it is essential to continue conducting promotions even with the ongoing pandemic and social media provides them with a platform for this.
Transforming: Participants have learned that there are unpredictable crises such as the COVID-19 pandemic. During the interview, most of them shared their experiences in coping with the pandemic. Experiences in dealing with natural disasters were mentioned less since businesses do not consider these as crises as much as the pandemic. They already established strategies for dealing with typhoons and earthquakes from years of living in their islands. However, the unpredictability of COVID-19 made most of the participants realize that they can be more flexible in managing their businesses (i.e. changing the prices or allowing the guests to rebook in the future) as they have accepted that crises are part of their lives or they can also just shut down, as shown in the quotes below:
Aside from the pricing, what you also do is you allow people to rebook. A lot of them fear like OK, we booked now and then we have to do an RTPCR test. So just making sure that they know if they book with you and something happened and they cannot travel, at least they will get their money back or they can rebook. (A10)
We lowered our prices and gave out discounts, also running promotions for potential guests. At the same time, we renewed our relationships with agencies and tourism services. (A5)
If this one will happen, I will shut down the booking … and I will not let anyone book straight away. (A3)
Some of them were surprised with themselves that they were able to let go of several of their resources and operate with very minimal costs. The government provides loans to ease the financial burden of businesses during the pandemic, however, business owners prefer to realign their budget internally instead of accumulating more debt especially since they are uncertain of when tourism will be back to ‘normal’. Debt makes their businesses less flexible to unpredictable changes that may occur in the future. Being flexible towards rapid environmental changes is important but having long-term business plans is still needed to manage crises better.
Participants learned the value of sustainability and how it should be incorporated more into their long-term business plans. As relatively small businesses, most participants planned to scale up before the pandemic started; however, after their experience with the COVID-19 pandemic, they have become more cautious with the investments they planned to make. One participant has observed various large businesses close during the pandemic and felt grateful and proud that they did not fully maximize their investments in their property because otherwise, it will be more difficult to maintain. A participant from Boracay mentioned that the next business they would open will be in another geographical location since they have realized that the tourism industry in Boracay is highly volatile after their experiences with rehabilitation and the pandemic. Most participants mentioned that “you should not put all your eggs in one basket” when discussing their investments and plans for scaling up. Organizations have made internal changes within their organization to cope better with future crises, as seen in the quote below:
What we’ve adjusted for that is that each one of our residences, we can sell them individually off and remove them, we have a way to get out a parcel, split the land and we can sell it. We could sell the land eventually. (A6)
However, accommodation businesses are still challenged by the lack of tourists’ confidence to travel during the pandemic even when travel restrictions have been eased.
During the pandemic, businesses improved their digital marketing skills and strategies. Most participants plan to continue improving their marketing strategies by utilizing social media such as Facebook and Instagram to rebuild tourist confidence. Participants would post pictures online showing that their businesses strictly follow health protocols that the government has implemented. Furthermore, following these health protocols is necessary not just for the safety of their guests but also for the business to be able to keep operating during the pandemic. Even when the government implements protocols that burden the tourism industry, it is still important that businesses follow these regulations since breaking laws will be costlier for them.
Dynamic capabilities in building resilience
Eisenhardt and Martin (2000) consider dynamic capabilities as processes that help firms adapt to the demands of an ever-changing environment. In the previous section, the researchers identified crisis management strategies on the basis of dynamic capability perspective that tourism businesses employ. These processes may be considered dynamic capabilities that help build the resiliency of tourism businesses. These capabilities mean that firms have the ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments (Teece et al., 1997). Under this dynamic capabilities perspective, island accommodation sectors are therefore able to more easily manage the crisis and hence become resilient afterward. The three domains evolve dynamically around island accommodation sectors’ crisis management and resilience activities to address adversity in turbulent times. The key sub-themes that emerged, as mentioned in the previous section, are summarized in Table 2.
The crises identified by the participants are all caused by external factors. According to Faulkner (2001), crises in tourism businesses may occur due to either failure in planning and management or events that are beyond the organization’s control. However, crises caused by the latter present a higher risk since organizations have limited capacity to prevent these in comparison to crises caused by mismanagement which can be addressed through internal measures (Faulkner, 2001). Crises are mostly due to natural hazards but participants do not consider them as crises per se. Participants experience typhoons and earthquakes every year and have already established strategies to prepare for these crises. Their frequent experiences with natural hazards increased their risk awareness and inclination to prepare for similar disasters in the future (Kovoor-Misara, 1996). Furthermore, human-made crises identified are still due to external factors. However, businesses generally adapt to these crises by making efforts and changes from within their organizations.
Participants mentioned that regular and transparent communication is imperative to be well-prepared for crises. Communication with the government and staff facilitates learning and knowledge transfer. According to Ambrosini and Bowman (2009), learning is vital in building dynamic capabilities. In crisis management literature, knowledge transfer is important in developing crisis preparedness because it allows members of the organizations to integrate their knowledge and form strategies from their shared experiences (Blackman et al., 2011). Aside from communication, participants considered finances and infrastructure as important resources that help them respond to crises. They ensure they have enough financial resources saved and that their infrastructures are well-maintained in case an unanticipated crisis occurs.
Financial resources act as an absorber of crisis shocks and having a large financial base allows businesses to be more flexible in their crisis response (Duchek, 2020; Pal et al., 2014). Participants considered financial resources as an important factor that will determine the survivability of their businesses, especially during the COVID-19 pandemic. Most of them had negative cash flow so some sought opportunities outside of the tourism industry while some changed their business model to adapt to the demands of the ‘new normal’. This aligns with the findings of Öberg (2021) that small firms are flexible and innovative in their crisis response. Furthermore, small firms are generally committed to learning (N.K. Saunders et al., 2014) which is why they make large investments in employee training. Participants trained their staff to be capable of handling multiple tasks. Cross-training their employees proved to be advantageous during crises. Human resources are essential for carrying out crisis response (Duchek, 2020) and though small firms only have a few staff, their employees are highly skilled and can offer valuable support and ideas to the business. Businesses have made a lot of internal changes to be able to adapt to crises but the decline in tourist confidence is one factor they cannot fully control. During the pandemic, they have learned to utilize social media marketing to rebuild tourist confidence.
Family businesses keep connected with the government entities and tourism associations to keep updated with the crisis situation. The government offers loans, employee training, and marketing support, when businesses were mostly idle during the pandemic. Businesses have also supported each other by referring their guests to another accommodation when their rooms are full, thus helping each other stay afloat during a crisis.
Moreover, having a strong employee-employer relationship is an advantage during crises. All participants value their few employees because they help keep the business operating during crises such as the pandemic. Businesses have already invested in training their staff to be capable of handling multiple tasks. Cross-training eliminated the need for additional labour, especially during the pandemic when most businesses have no profit to pay wages. They also prioritize the safety of their staff during crises which can build employee trust. This trust potentially makes employees stay with the business even during crises and makes them work harder in the future. Some participants also shared how they treat their employees as part of the family. All these strategies support the claim that family businesses focus more on enhancing their long-term investments such as the growth of their employees (Moreno-Menéndez & Casillas, 2021).
Apart from the support employees receive from their employers, the government also provides subsidies to tourism workers. However, business owners are reluctant to rely on government support since some of the regulations being implemented hinder the productivity of the tourism industry, especially during the pandemic. Nonetheless, they still participate in government programs that they think are beneficial (e.g., training, marketing).
Tourism businesses rely heavily on marketing to attract tourists (Avraham, 2016). However, during the COVID-19 pandemic, tourists lost the confidence to travel possibly due to the threat of the virus and the added barriers to traveling. To rebuild tourist confidence, businesses would post pictures online showing their staff following health protocols such as wearing face masks and sanitizing rooms. This marketing strategy is a form of destination image building since provides a favorable image of a destination (Kim, 2014) which reflects what tourists value the most during the pandemic—health and safety. Destination image is more effective in increasing tourist confidence when customers see that their social values and beliefs are aligned with what is being marketed to them (Ceylan et al., 2021; Noorshella Binti Che et al., 2019). Aside from marketing, sustainability is also another strategy that most participants would like to start incorporating in their business. However, government support is needed for the success of implementing sustainable tourism. The government also has the responsibility of rebuilding tourist confidence and ensuring the long-term recovery of the tourism industry from the COVID-19 pandemic.
This study focused on family-owned accommodation businesses, which are generally small firms and therefore have fewer financial resources. Nonetheless, they are innovative and capable of diversifying their businesses and seeking other income streams. Family businesses also exhibited high socioemotional wealth. They develop trust and close relationships with their staff which prevents employee turnover even during crises. Lastly, participants are generally positive towards crises since they have found other priorities, such as personal leisure and family time, apart from their business. Among the participants, those who are foreigners were relatively more passive towards crises caused by external factors. Some participants mentioned that their experience with the COVID-19 pandemic was not as bad since they are still able to enjoy the natural environment of the islands. On the other hand, some Filipino participants took advantage of crises to spend more time with their families. Based on the experiences of the participants in this study, family businesses are generally resilient. They also show great value for sustainability. However, they still need more government support to ensure that tourism recovery from COVID-19, which is considered as the biggest crisis yet in the industry, will be sustainable in the long run.
Based on the current findings and previous literature, we then present the following conceptual framework (see Figure 1) indicating the subthemes under each dynamic capability domain that contribute to resilience development as adaptive strategies to manage crises over time in the context of small island family-owned accommodation sector.
Conclusion, limitations, and future research
This study aimed to understand the crises experienced by family-owned accommodation businesses in small island contexts in the Philippines and how resilience is developed alongside the enhancement of their dynamic capabilities while navigating through crises. Resilience is viewed as a dynamic capability which also provides a mechanism as to how resilience is built through sensing, seizing, and transforming. Dynamic capabilities were used as a framework to understand how resilience is built in family-owned accommodation businesses operating in small islands. This study is contextualized in three small islands (Boracay, Negros, and Siargao) in the Philippines, which is prone to typhoons and earthquakes.
The results of this study show that the effects of crises in small islands are amplified due to the geographical characteristics of these destinations. Crises that affect the family-owned accommodation sector are mostly due to external factors. Small islands are at high risk of natural hazards, but businesses do not consider typhoons and earthquakes as crises per se since they frequently experience these hazards. Meanwhile, COVID-19 is considered the biggest crisis that the businesses have experienced. In this study, the researchers identified crisis management strategies that family businesses employ using a dynamic capabilities perspective. Participants have already established strategies for crisis preparedness, crisis response, and post-crisis recovery. Their regular experience with natural hazards enhanced their awareness for future risks and enabled them to prepare for similar disasters or disruptions. Strategies mentioned include knowledge transfer, maintenance of stable financial resources, infrastructure development, employee training, better marketing strategies, and a focus on sustainability. Findings also show that family-owned accommodation businesses have distinct crisis management strategies and unique characteristics that help them build their resilience capabilities over time. Thus, as resilience is developed and dynamic capabilities enhanced, these then become adaptive strategies to manage crises in the small islands.
This study contributes to theory and extant literature by providing a better understanding of how the small and medium family-owned accommodation sector develops resilience over time through the enhancement of its dynamic capabilities (sensing, seizing, and transforming) for crisis management. This then contextualizes resilience on small islands, which are deemed challenging for businesses to thrive due to limited resources, territories, and small market share. The results of the study also provide practical guidance on how business managers can effectively adapt to future crises and build their resilience over time.
This study is limited to participants chosen based on their willingness to respond and therefore it is difficult to generalize the results. A longitudinal study would be useful to further explore how the family-owned accommodation sector will fully recover from the COVID-19 crisis, when tourism activities resume. A quantitative study can also be done to determine the factors influencing resilience in family-owned businesses leading to a more generalizable result. Moreover, a comparative study is suggested to further explore what differentiates family and non-family-owned businesses in the context of small islands in terms of resilience building.
Ministry of Science and Technology, Taiwan, MOST 109-2410-H-110-083.