What are the various risks in Hospitality Industry?

Spandan Banerjee, PGDRM Jan’22-23

Risk Management in the Hospitality Industry is a big nut to crack. There are various risks in hospitality industry. Hospitality Industry falls under the broad category of the service industry that includes lodging, food and beverage/drinks, event planning, travel and tourism logistics and services. This is the technical answer! The real answer is, it is an industry where a host receives a guest, and their relationships and loyalties are built over goodwill and tested over consistency based on the level of service. You take great care of your guests, they keep coming back, and you falter once, good luck seeing them returning again without a hefty service recovery proposition. The game is ruthless and yet it is played day in and day out by every employee working on a property. 

Well, Villainizing the customers/guests out and out is not my agenda. To support their case, it is logical to expect the highest level of service at 5-star hotels because these hotels can and do have bizarre price lists for the simplest of items and services and to justify the premium for a bottle of water worth 20 but sold at 120, is purely piggybacking on great service and ambience. This is why the slightest misgivings cannot be ignored such as a strain of lint that may remain in the glass that the water is poured in. The stakes are limitlessly high and for good reason! 

BROAD AREAS OF RISK IN HOTEL BUSINESS 

To understand areas of various risks in hospitality industry, common risks and hazards in the day-to-day functions, one needs to understand the cycle of departmental experiences a guest goes through. One also needs to understand the not-so-talked-about risks, the risks that employees and workers face daily to provide this “service fit for God”. 

LET’S LOOK AT THE DEPARTMENTS INVOLVED, SEQUENTIALLY – 

Front Office- The first point of contact for any guest even before they enter a hotel is the front office. From the stage of booking or reserving a room, a guest is in constant touch with the hotel’s front office team. Thereafter, when the guest arrives at the hotel, the first department he/she communicates with is the front office. This is where one checks in at the reception and gets introduced to all the services one is eligible for and their availability. Thereafter, the guest is escorted to the room that they have checked into. This is where the immediate out and out interaction ends with the front office and the guest moves on to experience other services the hotel has to offer. However, the front office always remains in contact on and off with the guest for any query be it internal or external. Then again during departure is when the front office gets involved in the exit process. 

Broad Risks- A multitude of things can go wrong while creating the first impression process. The guest can find the reservation process cumbersome, the staff unhospitable, the onboarding process at the hotel less than extraordinary, the room specific to their expectations not available upon arrival, the room not being up to the mark, dust in the AC vents, the bed, the floor carpet not bouncy enough… The list is endless and so are the risks of losing business and bad word of mouth spreading across the market about the hotel not being worth the money.

Housekeeping- A department that is hardly given the amount of credit it deserves for the smooth functioning of a hotel. This department is responsible for not only the upkeep of the rooms you check in but also whatever hard and soft furnishings you see, touch and smell in the entire hotel. It is a mammoth task, and the team pulls off miracles every day like getting rooms ready at the nick of time. Housekeeping works closely with the front office to get rooms ready on time. Imagine this, a room takes 45 minutes to get ready, there are 20 rooms on each floor and there is one housekeeper per floor that person has 12 noon to 3 pm to turn a check-out room into a room ready-for-check in and that is a perfect situation if all rooms do check out at sharp 12 and all check-in guests do turn up at 3 or post 3. Do the math and you will realize the task of being a behemoth, but it is done and managed day in and day out. Additionally, housekeeping takes care of public spaces, furniture, fixtures, flower decorations, and general cleaning schedules of every nook and corner!  

Broad risks- Guest checks into a dirty room, hotel’s upkeep is not proper, dust everywhere, unclean bathrooms, wilted flowers emanating stench, furniture was broken, bed bugs, dirty swimming pool wash and change area, unkempt kids play area etc. All of these can cause massive guest dissonances and in extreme cases permanent guest loss as well. 

Food and Beverage (Production and Service)- Just like the front office and housekeeping are one leg holding a hotel’s head high, the second leg is food and beverage service and production. For the uninitiated, F&B production is the kitchen department that “produces” the food, and the F&B service department is the restaurant zone, where the  

chairs and tables lie, and the food and beverage are served, remember “service fit for Gods” this is where this term really takes shape. Nothing and I mean nothing can go wrong if you want your guests happy. Maximum complaints are received from this department; hence it’s only fitting that the food service industry is one of the 3 most stressful jobs. A guest comes to a 5-star to have coffee and toast with eggs that would usually cost 100 bucks outside and is ready to pay 1000. How would you think our coffee toast and eggs are different? Are we serving edible gold shavings, no! This is where service, mannerisms, guest recognition, familiarity, personalization, exclusivity, and finesse come in. A guest pays for all of this and also the food! It is then natural that a guest would want the absolute best and perfection for the big dollars being spent. 

Broad Risks- hot foods turn out cold, cold foods turn out warm, hot beverages are cold, cold beverages are not cold enough, insects, hair, unidentified objects in the food, service staff is not polite enough to melt Hitler’s heart, the restaurant is not well lit, the menu choices are not enough and diverse, the food is not up to the mark, the experience is substandard. 

Broad risks- hot foods turn out cold, cold foods turn out warm, hot beverages are cold, cold beverages are not cold enough, insects, hair, unidentified objects in the food, service staff is not polite enough to melt Hitler’s heart, the restaurant is not well lit, the menu choices are not enough and diverse, the food is not up to the mark, the experience is substandard. 

Food Safety- Food borne illnesses that may get transmitted due to surface contamination. This may result in a sick guest and a cook losing his/her job for ignorance. Such incidents of lack of food safety can also result in lawsuits, business interruptions, defamation and compensation claims, all of which can hamper or practically destroy someone’s career because news travels like lightning in the hospitality industry. 

Liquor liability- Liability standards vary from state to state, but businesses that choose to serve alcohol face a variety of risks, from guest injury to death – both on property and off. A bartender who might serve alcohol to a clearly intoxicated guest and the guest then ending up in an accident could be held liable by family or even law depending on where you are. 

Cleaning Areas that are High Up or Exposed- Housekeeping and maintenance staff risk their lives every day when hotel exteriors , chandeliers, bulb fixing work needs to be done. Every year countless deaths take place during such exercises and scheduled services around the world, yet these incidents hardly get the attention they deserve. Loss of life is and should be treated as the highest form of risk. 

Risks in the Food and Beverage Department – Sustaining burns while handling food is a recurring risk in the industry and is passed off as normal when it shouldn’t be. Kitchens contain walk-in refrigerators where meat, cooked products, and confectionary items are kept, temperatures are as low as -18 degrees Celsius, and chefs have to regularly access these zones to fetch or place materials. Multiple cases have occurred of chefs sustaining cold injuries inside the walk-in refrigerators and in certain severe instances, getting locked inside and freezing to death. Service staff handle glasses and cleaning hundreds of glasses in a day can result in breakage and subsequent injury. Standing for hours on end in the long term can result in health issues for workers. 

Risks in the Front Office Department- Guests checking out without paying bills. Wrong ID collection of international tourists, lapses in check-in procedure compliances, checking guests into dirty or occupied rooms, a short collection of cash, charging the incorrect incorrect amounts to guests at checkout resulting in under or overcharging, suicide attempts in the room that could be otherwise thwarted by strict monitoring of housekeeping discrepancy reports throughout the day, general lack of sensitivity towards guest complaints and inability to compartmentalize level of complaints etc. 

Steps to Remediation and Treating Risks

Training – one cannot focus enough on the importance of training, re-training, training the trainer over their respective work designations. Periodic training of each workforce member of the hotel is paramount to having a safe space for work and avoiding accidents or mishaps or service lapses that ultimately hurt the employees and their ability to work at their 100%.

Maintaining Adequate Staff Levels – This one is for the leaders of the industry to understand! Covid hit the industry hard, there is no doubt about that, and the resultant lay-offs were justifiable, however, the losses are long gone and so should the pay cuts and low pay that the industry has very happily adopted and are sticking to. What leaders today do not see, or gather, is that this strategy of forcing staff to work at now restructured low-pay jobs and still function with pay cuts may pay off in the short term but in the long run, it is only going to hurt their own business. The signs of which have already started showing, the government-run colleges of hotel management and the IHM’s are seeing massive seat and admission shortfalls for the first time in 40 years! I am a product of a once motivated hotelier to an industry quitter simply because of the career degrowth that the industry is putting everyone through. Leaders need to wake up and companies to dial and go back to the drawing board to rework the PA schemes.

Better Recognition at Work – This is related to the point above in some ways, sometimes a simple pat on the back or a round of applause in a department meeting for good work done can go a long way in employee loyalty. Logically, monetary increments cannot be distributed every time someone does great work and that is more of an annual process but recognition at town hall events or simple departmental meetings is an inexpensive and foolproof technique for assuring loyalty from team members. 

Better Working Conditions – Hospitality is one of the most strenuous job positions/fields in the world, stretching for 12 to 16 hours a day, going without a week off for weeks on end, and getting paid pennies’ worth is now a regular feature in all kinds of hotels. If the industry leaders and thinkers do not want a meltdown or breakdown of the industry from the inside, they need to look at better employee work conditions, regulated hours, assurance of overtime pay, better health insurance coverage for employees and their families and better employee recreation facilities. 

Conclusion 

To conclude, mitigating risks in the hospitality industry and risk management in the hospitality industry is essential as it remains for both guests and the hosts serving them, and it is this balancing act done right a thousand times in a single day across departments by people of different cultures and educational strengths day in and day out that we call the hospitality business.  

https://grm.institute/blog/blockchain-and-internal-audit/

https://grm.institute/internship-placements/

https://grm.institute/course/pgdrm/