Covid-19 and the Portuguese accommodation sector

The most devastating impact of COVID-19 has undoubtedly been the one on human health. However, the impact on the economy was also devastating. According to the UNWTO (2021b), the travel and tourism sectors were the most affected. International tourist arrivals dropped by 85% in January–May 2021 compared to the same period in 2019. Europe registered the second-largest decline (−85%), immediately after Asia and the Pacific (−95%) (UNWTO, 2021b). In the Southern European/Mediterranean countries, the drop in hotel bookings was 68% in 2020 compared to 2019 (UNWTO, 2021a). In Portugal, the total number of overnight stays in 2020 was 31,577,633 (PORDATA, 2021), corresponding to a drop of over 60% from 2019. Although statistical data show that virtually all tourism destinations globally were affected, they also reveal differences between global regions and nations.

Theoretically, from organisational theories and tourism models, one knows that performance and competitiveness are explained by destination-specific, industry-specific, and firm-specific factors (Molina-Azorin et al., 2010). In this study, we aim to assess the impact of a macro-environmental factor, the COVID-19 pandemic, on the accommodation sector in Portugal to answer the following research question: “What are the differences in the impact of COVID-19 in the Portuguese accommodation sector across regional destinations and industries?”

A descriptive approach, with a comparative analysis, was used based on secondary data from INE for 2019 (pre-pandemic period) and 2020 (peak of the pandemic period). Three indicators were analysed: the number of overnight stays, the number of guests and total income.

The main contribution of this study is a better understanding of the impact of COVID-19 on the accommodation sector, which is generally understood as very negative. However, this is a very simplistic view since it hides diverse realities.

Open systems theory explains how organisations are affected by factors that originate in the external environment that will affect elements from the internal environment. The open systems concept expresses the transaction between a system and the environment. The system acts upon the environment (planning function), and the environment acts upon the system (the learning function) (Alvarez & Emery, 2000). Therefore, organisations are environmentally dependent and environment serving under an open systems perspective.

The external environment is one of the most significant factors determining business success. The external environment accounts for variation in corporate performance, either because it is a source of resources (munificence), as competition and change (dynamism and complexity), and/or as a market source (growth), among other aspects. Munificence has been defined as the abundance and availability of external resources supporting organisational growth (Andrevski et al., 2014). Dynamism refers to perceived instability and continuing changes in the firm’s markets—it includes both the rate of change and the unpredictability of change in an organisation’s environment (Heavey et al., 2009). When the environment is highly dynamic, uncertainty may suppress the organisation’s ability to respond to the need for change. Complexity is normally defined as the degree of heterogeneity in the general business context (Dess & Beard, 1984).

Tourism is susceptible to external shocks (Richter, 2003), which may cause an unexpected downturn in tourism demand (Blake et al., 2003). In tourism, the external environment incorporates macro-level forces relevant across different locations, such as technological breakthroughs or global socioeconomic trends. However, it also includes destination-specific factors, such as natural and cultural resources. External environmental factors significantly impact the hospitality industry (Oparanma et al., 2009), and previous studies have demonstrated how destination effects are relevant in explaining competitiveness and firm performance in hospitality (Barros, 2005; Cracolici et al., 2008). At a destination level, competitiveness depends on seven aspects: (a) global (macro) environment; (b) competitive (micro-) environment; (c) core resources and attractions; (d) supporting factors and resources; (e) qualifying and amplifying determinants; (f) destination policy, planning and development; and (g) destination management (Ritchie & Crouch, 2003). One might argue that a mutual influence exists between the competitiveness of a destination and that of the firms located in it.

These theoretical underpinnings support our approach to studying how accommodation firms in different locations suffered unequally from the consequences of the COVID-19 pandemic. COVID-19 is an infectious disease and was declared a pandemic by the World Health Organization on March 11th, 2020. It has caused millions of deaths and illnesses worldwide (Wu & Wu, 2021), as well as economic consequences, namely in hospitality. “The decision to shut down hotels, restaurants, theme parks, and most attractions, as well as the travel ecosystem’s full disruptive effect, caused a considerable impact on worldwide tourism” (Costa et al., 2021, pp. 1–2).

Although the pandemic of COVID-19 is a factor of the global macro environment, which, generally speaking, explains the significant decrease in tourism demand across the globe, tourism literature suggests that there might exist differences across destinations. These differences might result from the competitive microenvironment, the resources and attractions available, and other factors (Crouch & Ritchie, 1999; Ritchie & Crouch, 2003), even at the regional level. During the pandemic’s peak, tourists preferred destinations with fewer confirmed cases and away from a high agglomeration of people. According to Li et al. (2021), this preference may be attributed to tourists’ perceptions of infection risk, and some destinations were generally perceived to be more unsafe than others. Additionally, the strategic management literature suggests that these differences might be explained by the industry’s characteristics (Porter, 1989) and the intrinsic factors/resources of the firms (Barney, 2001). Smaller accommodation establishments (fewer rooms) located outside urban areas may have been perceived as safer.

This study follows a descriptive approach. Descriptive research is a purposive process of gathering, analysing, classifying, and tabulating data and then making an adequate and accurate interpretation of such data, sometimes with minimal aid of statistical methods (Calderon, 2006). The advantage of descriptive research is that it provides visual aids to better understand raw data—in our case, raw data available from three different INE databases.

We focused our analysis on three indicators used for organisational performance assessment in the accommodation sector and also commonly used in T&H research (e.g., Attila, 2016)—number of overnight stays, number of guests, and total income. Data was collected for 2019 (pre-pandemic) and 2020 (peak of the pandemic).

The three most relevant accommodation typologies in Portugal were analysed. These were: hotels and similar establishments (e.g., hotel-apartment, inns, holiday villages); short-term rentals; and rural tourism units/manor houses (MH) in the seven NUTS II

Nomenclature of Territorial Units for Statistics

Firstly, the percentage weight of each region on the national total was computed for each indicator per year. Secondly, maximum and minimum annual values (for 2019 and 2020) were identified by regions, for each of the three indicators and by accommodation typology. Thirdly, considering the two years under analysis, the percentage variations were calculated for the three indicators by typology and region.

Regarding the weight of each region in the national total (Figure 1) for the three indicators, one can observe that in 2019 (pre-pandemic), Lisbon MA had the highest percentages of guests (30% of the national total) and total income (32%). However, the Algarve had the most significant weight in terms of overnight stays (30%).

Figure 1:

In 2020 (pandemic), the North region presents the highest weight in terms of the number of guests (24%), and the Algarve has the highest weight on total income (32%) and overnight stays (31%).

Table 1 shows the maximum and minimum values for each region in the two years under analysis for the three typologies of accommodation studied. In 2019 Lisbon MA was the region with the highest number of guests, considering the three types of accommodation. In 2020, however, the North stood out. The Azores had the lowest overall results in both years when considering the totals for all types of accommodation. However, regarding rural tourism/manor houses, Lisbon MA in 2019 had the lowest results.

The North presented the highest values in the rural tourism/manor houses typology for the three indicators in 2019. However, in 2020, it has been displaced by Alentejo in total income.

Lisbon MA presented the highest values for the number of guests and total income in 2019. In 2020, Lisbon MA was displaced by the North in terms of guests and by Algarve in total income. The Algarve maintained its leadership in terms of the number of overnight stays.

Table 2 gives a clearer vision of the impact of the pandemic in the sector, presenting the percentage of drop for all indicators across accommodation industries and regions. A chromatic scale was used to easily highlight the lower (green) and higher (red) percentages.

In global terms, for Portugal, we can observe heavy drops in the values of the three indicators, with the most significant impact on total income (−66%). Considering the three typologies of accommodation, we also note that rural tourism/manor houses were the ones that had the smallest percentage drop with emphasis on total income (−30%).

Considering the overall drop in the three indicators studied, the most penalised regions, in descending order, were: Lisbon MA, Azores, Madeira, Algarve, North, Centre, and lastly, the Alentejo.

The drops for the three indicators in Lisbon MA and the Azores were almost always greater than 70% (see the red cells in Table 2). As for Alentejo, the drops in the three indicators were never higher than 45% (see the green cells in Table 2).

These results confirm the impact of the external environment on the sector’s performance (Oparanma et al., 2009), namely through the dimension of environmental dynamism (Heavey et al., 2009). Results also suggest how destinations with different characteristics (Ritchie & Crouch, 2003) and firms with different resources (Barney, 2001) might have been diversely impacted by the external environment. Results are similar to other studies on the consequences of the pandemic across regions (Li et al., 2021).

The objective of this study was to assess the impact of a macro-environmental factor, the COVID-19 pandemic, on the accommodation sector in Portugal, across different accommodation industries and regions. We concluded that there were significant differences between types of accommodation and regions.

Results suggest that globally, in Portugal, the type of accommodation that suffered the least impact from the pandemic in the three indicators analysed was rural tourism, and short-term rentals were the most affected. On the other hand, the regions with the most negative results during the pandemic’s peak on the three indicators analysed were: firstly, Lisbon; secondly, the Azores; and thirdly, Madeira.

Although all industries still had a significant loss across all indicators studied (number of guests, overnight stays, and income), rural tourism/manor houses were the least affected industry, and Alentejo was the least affected region.