Risk and Crisis Management in the Hospitality and Tourism Industry

EKU Online > Risk and Crisis Management in the Hospitality and Tourism Industry

The hospitality and tourism industry like other industries, faces the challenge of managing risk and crisis. As an industry that involves human contact and provides services, its vulnerability to risk and crisis is even higher. Since crises occur when least expected, it is important to have a risk management plan establishing the steps to be taken in the case of a crisis. Planning for a crisis can help reduce the negative consequences, and better allows businesses or stakeholders to deal with unwanted and unplanned events. There are several risks related to the hospitality and tourism industry.

Data Privacy Risks

Data privacy issues can be major a major risk within the industry. Nowadays, most businesses in the industry collect customer data such as spending patterns and financial information to better provide customized services and increase customer satisfaction. Customers who provide personal information believe their data will be safe and carefully guarded. However, large data breach incidents exposing customers’ personal information have occurred. Businesses must do all they can to lower the risk of or manage such crises. To reduce risks associated with customer data,  businesses can implement data encryption for payment and personal information. Additionally, they can provide continuous training to employees about cybersecurity issues.

Environmental Risks

Another risk in the hospitality and tourism industry are environment-related crises. Because industry provided products and services are located at a specific destination, natural disasters such as earthquakes, hurricanes, or other extreme weather disasters can occur. Also, as we have recently seen with COVID, health-related incidents such as pandemics also pose significant risk. COVID dramatically impacted the hospitality and tourism industry because of travel regulations and large numbers of people refusing to travel. To cope with the current situation, many businesses in the industry have found ways to provide a similar experience or product while adhering to COVID guidelines and restrictions. One good example of this shift is restaurants selling meal kits or focusing more on to-go orders. Hotels have also started to emphasize the cleanliness and safety of their properties to draw guests.

While risks and crises are unpredictable, we know a crisis will happen at some point. Therefore developing methods to manage such risks or crises when they occur is important in order to minimize the damage and recover as quickly as possible.

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By: Daegeun (Dan) Kim, M.S., CHIA, assistant professor, Global Hospitality and Tourism

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