The change of technical progress direction of tourism and hospitality industry during pre- and post-pandemic

ABSTRACT

The COVID-19 pandemic dramatically affects the development of the tourism and hospitality industry. Tourism practitioners are faced with a strategic dilemma between technical innovations for reducing labour cost, or adopting cheap labour substitution strategy due to the wave of unemployment brought by the pandemic. Using a constant elasticity substitution production function, this study explores the different technical progress choices in the tourism and hospitality industry globally during the period of pre- and post-pandemic. Results show that tourism and hospitality companies in most countries and regions have experienced a deep technical progress during the pandemic. Different regions show a vast disparity in technical change directions according to their economic capabilities. The unbalanced development of tourism economy between developed and developing countries will be more outstanding due to the technical gap in the future.

KEYWORDS:

• Technical progress
• capital-directed technical change
• labour-directed technical change
• strategic substitutability

Disclosure statement

No potential conflict of interest was reported by the author(s).