Micro and small enterprises (MSEs) are essential to tourism as they provide economic prospects and enable social empowerment. This systematic review by Sunway University's Associate Professor Dr Alexander Trupp and colleagues frames MSEs as businesses which employ fewer than ten people, and their operations intersect across different areas of business and sociocultural aspects.

Scholarly work added that there has been an increasing preference towards products and services from local and small tourism businesses in recent years. MSEs are essential to national development, especially as they develop a unique and authentic destination/community branding. Thus, it is vital to understand the challenges the tourism MSEs face to explore avenues for small business resilience and sustainability.

The COVID-19 pandemic has revealed significant challenges to MSEs, thus posing the need to develop solutions. The main objective of this study is to understand and highlight the main challenges faced by small and micro businesses in tourism destinations. The systematic review process analyses 82 Scopus database articles, where four themes emerged about the main difficulties MSEs face in tourism destinations.

1)    Lack of funding
Compared to larger businesses, MSEs are less likely to have access to external sources of capital (e.g. bank loans, start-up aid from state agencies and entrepreneurial grants). For example, digitalisation in the tourism and hospitality industry is an uneven process where small businesses often find it more difficult to implement new technology due to limited capital available. This poses challenges to the continuity and expansion of an MSE.

2)    Lack of training
This systematic review also showed that most studies should have paid more attention to the training needs of SMEs in tourism destinations. MSEs have been affected by the COVID-19 pandemic, where technological and socioeconomic change exacerbated the challenges that they have faced. Because there is a need for MSEs to balance the training needs of employees and business priorities, training programmes will then need to focus on the intersecting needs of both the individual and the business itself.

3)    Lack of education and awareness
While running a business often requires intangible abilities such as the ability to recognise opportunities or the willingness to take risks, knowledge can impact small business owners’ operations and decision-making through strategic management, the ability to access and leverage information in gaining a competitive advantage, and research capacity for new and niche markets.

4)    Lack of skills
MSE managers must provide and empower employees with the necessary skill sets to deliver valuable services. This systematic review revealed that MSEs must enhance employees’ entrepreneurial, technical, communication, and managerial skills. However, there is also a need to recognise a skills gap between an MSE entrepreneur and employees, where the former possess more developed tourism skill sets than the latter.

Ways forward and potential solutions
The destination development plan emerges as a prospective remedy for funding limitations. This entails the management authority offering advice and guidance on funding applications submitted by MSEs, occasionally acting as the intermediary for allocating capital funds. Peer-to-peer lending can also be introduced, whereby loans can be facilitated to individuals by other individuals without banking intermediaries.

Furthermore, instead of focusing on expansion and organisational enlargement, MSEs should leverage their unique socio-ethical, socio-economic, and ecological advantages to appeal to tourism needs.

Skills advancement is crucial for both the entrepreneur and employees. Such emphasis can present the following benefits: Creating opportunities; maintaining fair, inclusive and secure employment; creating full, productive, and freely chosen employment for all; enhancing productivity; and promoting sustainable development.

It is also essential for MSEs to embrace innovation, reflecting on lessons learnt during the pandemic. Innovation can come from establishing new services, destinations/places and suppliers. Nonetheless, organisational designs and strategies can be innovated by exploring cooperative approaches that promote mutual growth and a more robust tourism sector.

To strengthen tourism MSEs, there is a need to recognise diverse socio-cultural environments and advocate for a localised approach in management, policy and planning. After all, each destination possesses unique characteristics and aspirations, requiring tailored strategies to contribute to the overall success of MSEs within the tourism industry.

In the ever-evolving landscape of tourism MSEs, customised strategies, innovation, and community-centric initiatives are pivotal for sustainable growth. By acknowledging diverse socio-cultural environments, MSEs can fortify their resilience and contribute meaningfully to the tourism industry's success.

Associate Professor Dr Alexander Trupp
School of Hospitality and Service Management
Email: @email

This article has been adapted from Alexander Trupp, Ahmad Salman, Marcus L. Stephenson, Ling-Foon Chan & Joo-Ee Gan (2024), A Systematic Review of Challenges Faced by Micro and Small Enterprises in Tourism Destinations: Producing Solutions through Resilience Building and Sustainable Development, DOI: https://doi.org/10.1080/21568316.2024.2307970