High season, low growth: The impact of tourism seasonality and vulnerability to tourism on the emergence of high-growth firms

Abstract The beneficial effects of tourism for growth are well known, but the negative ones are also among increasingly investigated issues. One of the open questions relates to the individual channels through which tourism effects translate into local economic outcomes. Using datasets on the population of firms and tourist arrivals over the 2012–2019 period in a small, tourism-led economy, this note shows that seasonality and overall vulnerability of a destination to tourism exert negative effects on the share of high-growth firms, consistent with recent findings of respective effects on housing affordability. Several times stronger effects of seasonality can be associated with capital underutilization, revenue instability, and sensitivity to external shocks. Still, future research is needed to corroborate these issues across space and time.