The tourism sector under uncertainty due to COVID-19 pandemic and the assumptions of new institutional economics

Abstract

PURPOSE: The aim of this study is to show the relationship between the functioning of tourism market subject to New Institutional Economics (NIE) in social terms. Furthermore, it aims to discover a need to identify relationships between the NIE theoretical framework and the phenomena and processes in tourism in the COVID-19 period.

DESIGN/METHODOLOGY/APPROACH: This research was based on critical literature analysis, statistical data and participant observation in the tourism sector. Notably, the new perspective presented in this study allows identifying non-market phenomena and processes that accompany economic mechanisms. This approach could be an important direction for mitigating the effects of the COVID-19 pandemic in the tourism sector.

FINDINGS: The study results showed that the diverse activities carried out by tourism sector subjects largely concern tangible and intangible public goods, however, these activities are not naturally compatible. Private tour operators have hidden goals—often short-term and particularistic—that frequently force public tourism institutions to adjust their activities.The importance in tourism of both formal and informal organisations is a prerequisite for strengthening the role of the state in achieving the social goals of tourism and support tourist enterprises which suffer under the COVID-19 pandemic. The novelty of the findings are connected with an attempt to explain a relationship between the functioning of tourism market subjects in uncertainty caused by COVID-19 and NIE assumptions in social terms.

PRACTICAL IMPLICATIONS: This study has implications for ways in which policymakers and managers could encourage tourism entities to focus on social aspects of tourism consumption. Social analysis concerning ‘new face’ of tourism under COVID-19 impact requires an interdisciplinary research and exploring the topic. The limitations of the study include little attention given to the specificity of the tourism market, including hotels, restaurants, air passenger transport in different countries of Europe.

ORIGINALITY/VALUE: It is the first time that analysis of new institutional economics has been shown as a way of searching for inter-institutional co-operation in the field of tourism policy.