Business Management
4 min read

Hospitality sector: Building resilience in uncertain times

EHL Insights
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5 practical tips on how to build a strong operational infrastructure to cope with the unexpected.

Hurricane Katrina, 9/11, climate change, COVID-19. From global pandemics to rising seas and terrorist attacks, tourism destinations and properties are highly vulnerable to uncertainties that can rock the world on a dime. Since mega-disruptions are increasingly frequent and unanticipated, hospitality businesses would do well to prepare for the worst with a comprehensive plan that details an immediate response to a crisis as well as addresses potential long-term challenges and plans. This way, whatever the crisis, the plans for addressing it in the moment and rebuilding later are solidly in place, even if those require flexibility and adaptability. As the famous Scottish proverb says: The best laid plans of mice and men often go awry.

What do the experts recommend? Here are five steps for assessing and developing resiliency in an uncertain future.

1.Assess vulnerability

Risks generally fall into two buckets: direct and indirect damages. Direct losses are caused by damage to buildings, equipment and services, while indirect losses are linked to reputational and brand risks, which can be ten times higher than direct losses. Although the hospitality industry hasn’t yet developed a sector-wide vulnerability index that would measure risk exposure, the authors of EHL’s 'Lausanne Report', which provides an overview of trends shaping the hospitality industry, recommend taking into account people, business, technology and environmental risks when assessing vulnerability. According to the report, “Among the most dangerous threats to the sector are environmental changes and catastrophes. While terrorism may pose a risk in some destinations more than others, cyber-attacks present a significant risk to the sector overall.” In 2018,when Marriott International inadvertently exposed the personal information of 500 million customers in 2018, for example, not only did the event pose enormous potential brand damage, but businesses responsible for breaches faced liability claims for failure to protect data. The key is to make sure that your property’s insurance policy is comprehensive and up to date.

2.Develop an emergency plan

Whether it’s a fire, a terrorist attack or a disease outbreak, the first order of business is ensuring the safety of your guests. That’s why it’s essential to frequently hold emergency drills and ensure that staff knows the safety protocols and equipment is well maintained. Do you have a plan in place to move guests to safe rooms on the property? What if they need to be suddenly evacuated due to a fire or hurricane? Have you established plans with partner hotels? As Will Brown Head of Enterprise Resilience for the Middle East Region at PWC advised in the piece ‘Building Resilience & Continuity in the Hospitality Industry’:

“If you have to send your guests to a competitor hotel, they may find they like their temporary quarters better than yours and you could lose them in the long term. So the best approach is to have an active network within your own group of hotels (if you’re part of one), and a resilient booking system that is robust and provides real time availability across your group.” In other words, don’t address one risk by exposing another.

3.Prepare to function off the grid

How will you function if a crippling ice storm or devastating hurricane were to knock down power lines and access to the outside world? While you may have backup systems and emergency generators in place, one of the biggest mistakes according to experts is that owners fail to test and maintain them regularly. A fully-charged and spare external mobile phone bank and phone battery for mobile phones is a good idea. Don’t overlook the obvious - the same precautions you would take to protect your home - keeping a stock of candles, heavy-duty batteries and flashlights, and keep at least one landline connection. Do you know what you’d do if guests were to become trapped in elevators due to power outages? How will you prevent and deal with food spoilage? It’s not only essential that you think through these eventualities, but conduct regular and ongoing training for staff and perform emergency practice drills to reduce chaos during an outage.

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4.Communicate in a crisis

After ensuring the safety of all guests and staff, communication is the number one priority in any crisis - both for safety and because it inspires confidence. Communicate clearly and regularly with guests, relevant authorities, and with your head office. If possible, use your customer service center, which may be able to help with relocation and communication with guests, even after they’ve been moved to a new location. If the incident has hit the media and concerned relatives start calling, you’ll need a central point of contact. To avoid conflicting information, make sure you have designated spokespeople to represent your hotel in case of an emergency. In all crisis communications, honesty and transparency are key. Hold regular meetings with law enforcement and emergency services in your area to keep the lines of communication open, and keep your staff regularly updated. In terms of communication with guests and potential guests, Dr. Laura Zizka, Assistant Professor at EHL, emphasizes that:

“A clear personalized and reassuring message from the owners of your establishment is essential. While you shouldn’t make any definitive statements around issues that are still unclear, do keep clients abreast of any efforts you’re making, either currently or are planning to make in the future.”

5.A graceful comeback

If an unfortunate event has taken its toll on your operations or reputation, planning for recovery is essential. Some tips for a return to business-as-usual: waive your cancellation fee policies and ensure guests they can book without concerns over possible penalties; prepare promotional messaging that is timely and forward-looking; keep in touch with your clientele on social media to keep them apprised of your plans for the future. It’s important to maintain engagement and keep the conversation going. In terms of COVID-19 specifically, Dr. Zizka warns of “COVID-washing”, which like green-washing, is misleading and can ultimately damage an establishment’s reputation.

“If a company discusses hygiene practices that were already in place before the coronavirus and positions them as something new, this will only raise scepticism on the part of clientele. Messages must be authentic and describe new measures that have been put into place to ensure the safety and security of all hospitality stakeholders.”

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