The COVID-19 pandemic has generated significant challenges for tourism destinations (UNWTO, 2022) and particularly for small island destinations (SIDs) (e.g., Farrell et al., 2020). While the pandemic has uncovered the low resilience of SIDs, it has also provided the means for reflection, awareness and re-organisation of policies for more resilience (e.g., Sheller, 2020). In this resilience-building process, the circular economy (CE) is gaining significant attention in tourism (e.g., del Vecchio et al., 2022) and in SIDs for their sustainability and resilience (e.g., Schumann, 2020; Zafeirakou, 2022). However, the role of the COVID-19 pandemic in motivating and enabling hospitality entrepreneurs’ adoption of circular practices in SIDs remains unclear. Such an investigation is justified by the characteristics of small island territories (Fernandes & Pinho, 2017) that limit the applicability of empirical evidence from other destination contexts (e.g., Sorin & Sivarajah, 2021). Drawing upon a study of the tourism sector transition to a CE in the Orkney Islands, Scotland, the paper discusses how the COVID-19 pandemic has emphasised and raised awareness of a tourism CE on their path to recovery. The main findings show that the pandemic helped enhance the relevance of improving island self-sufficiency, self-reliance and local financial circularity through a CE in the hospitality sector. The pandemic has also enabled better intra- and inter-regional collaboration, entrepreneurs’ access to innovation, as well as valorisation of informal circularity. The paper helps refine our understanding of how COVID-19-related measures in SIDs reinforced the usefulness of CE practices for resilience-building and overcoming island-related challenges by promoting self-reliance and sustainability.