By 2030, multiple changes will occur and will influence the hospitality industry due to global changes, one of them being an increase of vulnerability.
The second thesis of the Lausanne Report, EHL - in cooperation with hospitality experts - discuss this trend that may disrupt the industry depending on its ability to cope with external and internal threats.
2. Vulnerability on the rise
One of the main challenges the hospitality industry is facing is the magnitude of hazardous events as well as their unpredictability. The industry is thus confronted to how fast it can react and adapt to such crises and hazard.
Scenario A: Fragile hospitality
The hospitality industry’s vulnerability to a variety of events could increase, which might transform hospitality into a fragile business. Among the most dangerous threats to the sector are climate change, safety and security issues, wild card events (e.g. SARS) as well as unprecedented migration streams.
Here are some key rationales regarding a fragile hospitality:
- Hazardous events often produce knock-on effects such as climate change which has negative impacts on various areas from polluted water, to health issues and poor living conditions
- Climate change also triggers conflicts such as refugee migration and humanitarian crises, which lead to political and social tensions.
- Once disruption has occurred, it is difficult and takes time to recover and build up resilience
- The evaluation and prediction of future risks relies on data, but hotels lack resources
- Hotel stress tests will impact market valuation and brand value of hotels
- Vulnerability assessments will highlight a hotel's exposure to threats and its capacity to deal with crises
Scenario B: Creating resilience
Vulnerability is based on two dimensions: direct and indirect damages. Direct losses include damage on the building, infrastructure or equipment of a company due to a hazardous event. On the other hand, indirect losses involve a competitive disadvantage of the company over non-affected competitors as well as the overall reputation of the damaged business.
To create resilience, the industry will need to focus on:
- Quantifying its vulnerability, keeping in mind that indirect losses can be 3 to 10 times higher than direct losses
- Use the results of the assessment in order to develop recovery measures, emergency plans, and vulnerability reduction strategies
- Leverage the Internet of Things (IoT) and IT systems to control all relevant infrastructural components
- Be capable of disconnecting hotel properties from the public infrastructure in order to not be further damaged or intruded
- Master big data to assess the hospitality industry’s exposure to threats
- Establish an exchange of data between the public and the private sector to manage the risks on the infrastructure
Vulnerability assessments, security planning, stress tests and security infrastructure will push the hospitality industry in becoming more resilient. As guests do not want to feel overwhelmed by clearly visible security measures, hotels have started to use different, less-intrusive precautions.
Although hotels that will choose to be more resilient will be in a more favorable position, it does not guarantee success in case of disruptive events. In such situations, even hotels with top security infrastructures and measures might not be enough to encourage guests to travel.
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