Developing dynamic capabilities for community collaboration and tourism product innovation in response to crisis: Nepal and COVID-19

International tourism will continuously face challenges to fully recover after COVID-19 unless destinations implement universally agreed upon public health protocols that make travellers feel safe. This challenge is even more daunting for least developed countries like Nepal, which relies on rural, nature and adventure tourism. These rural regions, already under stress prior to COVID-19, must now address the pandemic’s consequences before availing themselves of opportunities for more sustainable tourism development that experts believe the pandemic confer. We use “mutual gaze” to examine how exchange relationships between rural and urban stakeholders shape collaborative decisions on tourism development. We conceptualise tourism development interactions through the innovative development of unique offerings to attract domestic tourists during the pandemic. Data on Nepal’s rural tourism sector reveal that representative local associations enable innovation through the integration of dynamic capabilities and resources in the development of sustainable tourism products. While the study confirms the significant role government plays in facilitating cooperation among stakeholders to legitimise relationships and ascertain sustainability goals, it reveals organic collaboration is essential for inclusive planning and decision making at grassroots’ level.