10 Uncontrollable Variables That Affect the Hospitality Industry
In this article, we cover 10 hospitality industry risks, to help hoteliers be prepared for sudden change.
The hotel industry is subject to change at any moment (just as any industry is). And in many cases, there isn’t anything hoteliers can do about it.
Whether it be an earthquake, a significant change in climate, or something as extreme as a terrorist attack, there are a number of threats in the hospitality industry that can happen at any time.
An uncontrollable variable that affects the hospitality industry could show up out of nowhere, which will have the power to significantly impact travel, and cause a plummet in hotel occupancy rates.
1. Pandemic Diseases
A very current example of an uncontrollable variable that is affecting the hotel industry negatively right now, is the Covid-19 pandemic.
Throughout history, deadly viruses like Covid-19, SARS, and H1N1 have shown up suddenly, stopping the world’s activities, and putting human lives in danger.
Pandemics are a very definite example of a threat in the hospitality industry, because they cause travel restrictions; meaning hoteliers cannot welcome guests.
Put in place meticulous health and safety practices, so that in the event of a sudden spread of a pandemic disease (like when Covid-19 appeared), your property will have a plan of action. Stock up on face masks & hand sanitiser, create a social distancing plan, and so on.
Here are some examples of how hoteliers are responding to the current pandemic: ‘hotel industry covid-19 tips’.
2. Natural Disasters
Another common threat in the hospitality industry is natural disasters. There have been many cases around the world where earthquakes, tsunamis and other natural disasters have taken the lives of many people, and left those left behind in a state of distress – having lost loved ones, and needing to rebuild homes & businesses.
Even the smallest earthquake, leaving behind little damage, can cause uneasiness among travellers, therefore dropping the numbers of potential visitors to your location and property.
Covering your hotel property under insurance for uncontrollable variables such as natural disasters, is highly recommended, as it would help your business recover should such an event occur.
3. Climate Change
A very topical issue that the hotel industry is currently facing is climate change.
Climate change (also known as global warming) is an uncontrollable variable that affects the hospitality industry because its causes have been adding up for hundreds of years.
The impact that climate change might have specially for hoteliers, is the change in the earth’s environment. Some naturally cold areas are getting hotter, and vice versa. Meaning that travel allures for destinations are changing rapidly.
More than this, climate change is increasing natural disasters, putting your property at further risk of floods, fires, and other natural disasters.
While climate change is an uncontrollable variable, it is also something we can attempt to slow down. It is now vital that hoteliers consider their environmental footprint, so as not to contribute even further to the detrimental impacts this global issue is having on the earth’s environment.
Here are some examples of how hoteliers are “going green in the hospitality industry”.
4. Civil Unrest
A common value shared amongst all types of travellers, is safety. While some travellers enjoy thrill-seeking, or other adventurous activities, all travellers share the common value to be in a politically safe environment.
When a country is struggling under civil unrest, most people would opt not to travel there.
Ensure to provide clear information and updates on any current civil unrest happening in your region, addressing safety concerns and measures, so as to ensure that potential guests that are considering staying at your property are fully aware.
5. Financial Crisis
What is the one thing that people need to be able to travel? Money. So when a financial crisis occurs, such as a recession for example, people have much less (or in some cases, next to none) discretionary income.
In times of financial crisis, people can only spend on necessities – travel for leisure is a luxury. Hence, it is a substantial threat in the hospitality industry.
Always stay on top of financial news, so that you are aware of trends in the economy. In addition to this, be sure to build a solid financial plan for your property, that takes into consideration the unexpected variable of a financial crisis. Always remain up to date with financial news of both your own country, and the countries where your target market guests reside. This will help you be prepared, in the case of a financial crisis occurring.
6. Street Crime
In the same way that civil unrest will put travellers off from wanting to travel to certain destinations, as can street crime.
Some target markets such as free independent travellers may be less deterred by locations with heavy crime statistics, but travellers such as families and retirees, will be very discouraged.
Ensure to put in place security measures – such as security guards, smart lock systems and other measures – so that travellers feel safe at your property.
7. Attraction Closures
Something less distressing, but equally as impactful as a threat to the hospitality industry, is the closure of famous tourist attractions.
If the main driver to stay at your accommodation is the close proximity to a famous attraction such as Disneyland for example – if this attraction closes down, the number of travellers visiting your destination will plummet.
When building your hotel strategy, do not rely solely on guests visiting your destination due to one specific hotel attraction (such as Disneyland for example). This group of travellers may be your main target market, but ensure to define other target market segments too. This way, you will have other potential guests to fall back on, should a main attraction closure occur.
Here are some tips on how to create a hotel target market segmentation strategy for your property.
8. Terrorist Attacks
Another example of an uncontrollable variable that affects the hospitality industry, are terrorist attacks.
Terrorist attacks come out of nowhere, and bring with them substantial levels of distress and unrest.
Following a terrorist attack, most travellers opt not to travel to the location of interest, due to feelings of fearfulness.
In the same way that you would put in place security measures for street crime and civil unrest, ensure to stay up to date with news reports, and safeguard your hotel property as best you can, to be prepared for the unlikely event of a terrorist attack.
9. Cyber Attacks
Since emails and the internet were created, business owners (including hoteliers) have been prime victims of cyber attacks.
Cyber attacks pose a threat to the hospitality industry because cyber criminals victimise hotel staff and owners, with phishing attacks (whereby they pose as an employee to get sensitive information), and other hacking attacks.
The hotel industry processes a high level of credit card information, hence is a prime target for cyber attacks. Hoteliers need to ensure that they keep credit card numbers encrypted with payment gateway solutions like Stripe. It is also vitally important for hoteliers to be well educated on new and current forms of cyber attacks, so that their staff do not accidentally give out sensitive information (such as guest credit card data).
Here are some examples of how to keep guest data safe in the hotel industry.
10. Air Pollution
In the same way that climate change is an uncontrollable variable of the hospitality industry, as is air pollution (which is a cause of climate change).
For locations that are known for bad air pollution, some travellers might be discouraged to visit due to respiratory or other health conditions that could be triggered by the unhealthy air.
Just as you cannot control climate change, you also cannot control air pollution. You can, however, limit your contribution to it. Ensure to do your part in taking care of the local environment.
There are a number of uncontrollable threats in the hospitality industry, so stay alert at all times
You may not be able to control these 10 hospitality industry risks, but you can be prepared for them.
Knowledge is power. And now that you are aware of these 10 hospitality industry risks, you are already more prepared than you were before.
Make sure to educate your hotel staff, connect with local industry organisations, and encourage staff to remain up to date with world news, common cyber attacks, threats of civil unrest, and so on. This will help your hotel business be more prepared, should any of these threats impact your location.
Also ensure to put in place safety practices in the case of natural disasters, and security in the case of crime, so that guests feel safe at your property. You cannot control these risks, but you can be prepared for them.
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