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

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