The hospitality industry is a dynamic and competitive space, with new trends and challenges emerging constantly. With global travel recovering back to its pre-pandemic boom, the number of risks that hospitality businesses must prepare for and proactively mitigate is on the rise. This sector faces a variety of potentially damaging threats that hotels need to contend with, particularly as they deal with an influx of both leisure and business travelers. It is paramount that these companies take advantage of risk management software that can help to discover these threats before they negatively affect business.
From IT security threats to guest behavior, businesses in the hospitality sector face a wide range of risks that can impact their operations, reputation, and bottom line. In this article, we’ll discuss the top risks facing the hospitality industry and how Resolver’s risk management software can help mitigate them.
1. Data privacy
Cybersecurity has been a big concern for a number of sectors, ranging from power and utility companies to government organizations. While those specific industries are more concerned about cyberterrorism, the hospitality business is more focused on preventing data and identity theft.
On November 30, 2018, it was reported that Marriott International Inc. faced a breach that exposed the personal information of 500 million customers. The attack is believed to have begun in 2014, two years before Marriott bought Starwood. Marriott’s internal security tool detected the intrusion in September, but the company was unable to analyze the breached information until November 19. Through the attack, the hackers were able to gain access to the names, phone numbers, emails, passport numbers, travel details, and payment information of customers.
An IT security breach has huge ramifications. At the very least, businesses are required to contact other guests (past and present) and inform them that their data may have been compromised. This alone can be costly and may also lead to brand damage. If stolen data is used by fraudsters, the businesses may face liability claims for failure to protect data and maintain reasonable safeguards.
As more hospitality and travel companies use digital systems to automate tasks and manage their data, they need to be aware of the potential risks these solutions bring to the table.
2. Guest behavior
Guests represent the fuel for any hospitality company. Without guests and travelers, these businesses wouldn’t make any money. However, guests can also potentially be the biggest threats — both directly and indirectly — to profitability. Lawsuits from people who are injured or damaged guestrooms can represent a big risk to the bottom line.
Take, for example, Plim Plaza. In October 2011, the Maryland Department of Health and Mental Hygiene discovered Legionella bacteria in water collected from various locations. Six people fell sick because of the disease, and one of them died. The California-based hotel chain was later sued for $6 million by those who contracted the disease.
Another instance of guest risk occurred when the owner of a Hilton condo dropped several beer bottles over a railing. The bottles caused more than $10,000 worth of damage to the hotel’s pool and hot tub. Additionally, some glass landed on the roofs of other buildings, causing further damage.
Hotels should have internal controls in place to handle guest destruction and ensure travelers’ safety during their stay. Small things, such as closer management of property and resources, can prevent incidents like this from happening in the first place.
Staff is another critical risk. During the recession, many employees were rooted in their jobs because it was so difficult to find work elsewhere. As the economy improves, staff will have more options both in and outside the industry. This means hotels are at greater risk of having their key personnel poached by their competitors. Hiring and retraining are options, but they come with additional expenses.
Travel and hospitality companies need to address any demographic, wage level, and worker satisfaction issues to ensure their staff remains motivated and content. Creative companies are coming up with new retention plans and innovative strategies to help keep employees engaged.
At the same time, hoteliers also need to ensure their employees aren’t actively working against them. Property theft is a big issue at many hospitality companies, given the number of amenities they deal with on a daily basis. While a stolen towel might not seem like much, theft adds up over the course of the year. This is especially true if hotels are part of a larger chain.
In the hospitality industry, branding is crucial for driving customer loyalty and differentiating your business from competitors. Popular brands like Hilton and Marriott have become household names and are trusted by customers to provide high-quality service and experiences. However, maintaining a strong brand also means being vigilant about protecting it.
Many hospitality companies are fiercely protective of their brands and trademarks and will take legal action against any infringement. For example, the Hilton Prestige Portfolio faced a copyright infringement lawsuit from Prestige Resorts & Destinations, which claimed that Hilton had infringed on its trademark and engaged in unfair competition.
To avoid legal disputes and protect your brand, it’s important for hospitality companies to conduct thorough trademark searches before launching new products or services and to monitor their trademarks regularly to detect any potential infringements.
Protect your hospitality business with Resolver
Resolver’s risk management software provides businesses in the hospitality industry with a comprehensive and proactive approach to risk management. With powerful tools and solutions designed to address the top risks facing hotels, accommodations, and other travel businesses, Resolver can help hospitality businesses protect their operations, customers, and reputation.
Proactive risk management is critical for businesses in the hospitality industry. By identifying and mitigating the top risks facing their operations, businesses can protect their customers, reputation, and bottom line. Resolver’s risk management software offers robust tools and solutions to help businesses in the hospitality industry stay ahead of emerging risks and thrive in a rapidly evolving industry.
If you’d like to learn more about how Resolver’s GRC software can help your hospitality business grow, register for a short guided product showcase, or request a custom demo with one of our representatives.