Hospitality Industry Challenges & Risks

Posted by Nick Sica on Mar 25, 2019 3:34:40 PM

Hospitality Risk Management | The ALS Group

As the Hospitality industry continues to experience growing activity amidst a strong economy, there are, inherently, challenges that must be continuously addressed and improved on to ensure customers keep coming back. Identifying challenges and solutions to those challenges is one aspect of avoiding pitfalls, but an often overlooked perspective is the risk(s) to which those challenges could, ultimately, lead.

The Hospitality industry continues to enjoy a growing international customer base which pushes industry leaders to continue to seek the ability to provide a unique and memorable experience for visitors from abroad (especially). This includes identifying the right technology solutions for an ever-growing customer base with diverse and cultural backgrounds from all over the world, personalizing the customer experience, and staying competitive in pricing amidst the rise of Airbnb options in the market.

As you would expect, there is a constant race in the Hospitality industry to continue to advance and to be offering the best, most desired experience at competitive rates. While the solutions to the above challenges are wide ranging, there are some risks associated with addressing those challenges that should not be overlooked.

Some of those risks include: Employment Practices Liability (EPL) – this is a risk that Hospitality owners have which stems from their interaction with both employees and the general public (third parties). EPL risks can be mitigated in various ways such as having an up-to-date, legally appropriate Employee handbook, a guidance document on how to handle any incidents that may trigger an EPL policy, and providing training and guidance to staff on how to handle such complaints.

*Note: An often-overlooked risk mitigation technique is one of compassion. Often times, whether it be an employee or a third-party, the person alleging wrongdoing is first and foremost looking for understanding, sincerity, empathy and care from the ‘Owner’ – make a customer feel like they are heard and their concerns are addressed, and sometimes people’s bad experiences change from a potential claim to a positive experience. This can only happen if a company is genuine in their approach and cares to make each and every customer or employee see that the company truly cares.

Employment Practices Liability insurance is a nuanced coverage that should be carefully considered, not just for the Hospitality industry, but for all companies. This is just one risk those in the Hospitality industry face regularly, but one that has implications beyond claim amounts – the related reputation risk is significant.

Over the coming months we will continue to explore risks in the industry that arise inherently or as a symptom of other activity.



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Topics: Claim Reporting, Human Capital Risk, Insurance, The ALS Group, Total Cost of Risk, COVID-19, total cost of risk analysis, hospitality risks, what is risk management, hospitality industry

The ALS Group

Risk Management Blog

We manage more than a quarter billion dollars of premiums for a diverse range of clients around the globe. 

Our areas of expertise include:

  • Enterprise Risk Management (ERM)
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