How to manage crisis in Hotels


It’s every hotelier’s worst nightmare when something goes wrong, so how do you effectively manage a crisis?

The hotel industry is highly complex and prone to several crisis events. The increased and growing number of crisis that impact hotels, supports and highlights importance of studying effective crisis management within hotel business environment. The objective of research is to critically review crisis management focused on hotel industry and to explore signal detection, key element of crisis management.

By Elmira Soltani



  Definition of Crisis management

The primary effect of the crisis to any firm and industry is its image, reputation and capability to function. In order to prevent the upheaval, many people need to be conscious of the responsibilities and roles in time of crisis. Moreover, the staff and employees should be aware of the issues that would possibly hit them. Inevitably every crisis receives the attention of the media and as a result draws the interest of the public, specifically from possible tourists (Barton, 2003). Therefore, financial outcomes, reputation and corporate image may be critically weakened by crises. Firms that is poorly prepared as well as their destinations where client safety is confronted by risk losing clients. Crisis management is supervising a crisis that may have great impact to the profitability of the business. The foundation of crisis management depends on the searching, plowing and collecting of the achievement that could possibly get from a crisis. The basis structure of a crisis operation management is to identify the occurring crisis to take the proper action and to make that public action. An efficient crisis management strategy permits a company to decrease the possible risk to its status showed by the disaster or crisis situation. This is important since the unsatisfactory managed crisis that results to bad publicity can influence the consumers’ perspective of a firm in duration of time.


  Importance of Managing Crisis in the Tourism (and Hospitality) Industry

The crisis in the hospitality and tourism industry should be managed with a specific care for different reasons: most of the companies in the said industry depend on discretionary spending of their consumers (Bitner et al, 1990). This implies that the hospitality and tourism firms are very receptive to animosity since the acquisition of the service or product is not essentially valuable to the clients and they can easily let go of. The marketing of the services and products tourism solely depends on the awareness of the consumers know about their purpose and the level of risk that they are eager to tolerate. Thus, any aspect that shares to a raise in the recognized risk in utilizing a tourism service and product will have a negative effect the buying behavior of the consumers. This outcome also implements to broad industry crises.

The involvement of tourism and hospitality industry is both developing and industrialized countries are so great recessions in the stage of the industry practices as their concern. The consequences expand beyond the directly associated activities with the tourism and hospitality industry, particularly hotels, airlines and catering, to segments that provide intermediary or final products that are bought by employees and companies in the said industry, so that all segments of the economy are influenced to a lesser or greater extent (Booth, 1993). The main reaction of the tourism and travel-related companies to important recession in the industry is to negotiate with the government to execute a range of rules to counteract the recession. The policymakers are facing with the hard decision of what, is any, ways to take, specifically since the execution of many policy measures is expensive and the related efficiency of another different measures. The government is challenged, especially, by three problems that are important to any downfall in tourism and hospitality practice. The first matter of whether the crisis is adequately great to value offsetting measures. The relevant fact includes the scale that reduces in the profit of the tourism and hospitality industry, the recession have resulted to impact across the other segment of the economy and the impacts on the welfare of the industry. The second matter is the period of the crisis. If turmoil in the economy is perceived to last longer or even permanently, the company should focus their attention on lessening the modification costs as the economy advances to the new balance. If a crisis is just short-term in nature, the issue should be shield the economy of is the unfavorable impacts of the crisis (Brewton, 1987). The third matter is the issues of the policies option for implementation. In this circumstance, the companies should examine the related advantages of substitute policies consideration and responses that are integration of rates of relief and policies that is most cost-effective in increasing income and minimizing the expenditures.

The option of the responses to the policies, preferably, is according to the previous estimation of the dispersion and magnitude of the effect of the crisis and the effect of substitute measures across different segment of the economy. The estimated economic effect of the changes in the demand for the hospitality industry has, conventionally, been assuming employing input-output model. This model is well-created means of taking responsibility of the inter-sector effects of diverse types of exogenous distress to the economy. (Booth, 1993) On the other hand, the input-output model depends on the number of pre-suppositions, like a fixed costs and salaries that may not be proper for the conditions of particular economies.


  The Procedures of Crisis management

Generally, the use of resources and time strategies for crisis management should have the development of a project plan provided by the firm, the high skilled employees and well-equipped projects, well-trained and well-educated employees, as well as efficient allocation of budget. Moreover, to these methods, the implementation of crisis management will most possibly provide increase to different problems and challenges. It is then fundamental that the firm recognizes these issues and get ready for their countermeasures in order to avoid worst impacts.


  Recognizing Possible Problems

This strategy will aid the firm to classify possible problems in relation to quality systems should be used in crisis management (Bamford and Xystouri, 2005). One objective of developing other advance actions is to attend to the future challenges. The fast recognition of problems before the project is applied is advantageous not only because it avoids worst business impacts from occurring, but this also guarantees the length of the crisis management project. If the firm can last the probable problems of crisis management, the allotted resources for it implementation will be saved.

The training in crisis management is one of the main elements that the firm should put in mind in order to classify the potential challenges. Basically, there are two types of crisis management training that will be very functional including statistical problem-saving and training. The training comprises of training on technical issues, participative methods, brainstorming or nominal collecting techniques that can be implemented in the crisis management.

Sophia Soltani, editor of Hotel News ME reveals some top tips on how hoteliers can effectively manage a crisis and why it is imperative for the staff to control the crisis and not the other way around.

Crisis management has its roots in strategic planning incorporating contingencies for unexpected events. And the challenge for hotels is to recognise the early ‘warning signals’ and

take appropriate action before a real crisis unfolds.

So what can be classed as a crisis? There are several variables: those resulting from internal actions of the hotel vs. trends taking place in the marketplace or changes in the immediate environment outside the organisation. Generally speaking, a crisis as an event is characterised by its unexpected nature, inflicting severe impact on those involved. Moreover, a crisis typically demonstrates the characteristics of suddenness, uncertainty and time compression thus demanding immediate action from the hotel and management teams.

How any of these challenges are managed can determine the magnitude of the impact a crisis will have on an organisation. Prompt and expertly dealings with a crisis situation and those affected by the crisis can also open new opportunities for future business success. Regrettably, such events are an occupational hazard for many hoteliers, and it is common for establishments to be dealing with the potential of a crisis on a daily basis.

In any crisis, it is a situation that requires immediate action, tact, and most importantly, discretion. Knowing the appropriate steps to take ahead of time can make dealing with this easier and enable the hotel and its staff to return to some form of normalcy.

Top tips to remember include: Be prepared for crisis situations – response practices within a hotel should be mandatory for all staff, some hotels even produce crisis preparation manuals for all staff to read covering all probable situations.

Managing costs during a crisis – Managing costs effectively during any crisis is probably the key to being able to remain in business during and after thr crisis, as any reduction in hotel occupancy rates will translate into a drop in the revenues. However, this cost saving exercise should be conducted in a way that allows the hotel to bounce back quickly once the demand for their services returns.

Make use of all local advice – it is imperative for hotels to know their local areas and building regulations and this advice is often freely available when contacting the local authorities.

Maintain good communication with your guests – accurate record keeping should not be limited to the customer relations department but be a standard across all the departments within the hotel. Moreover, all well documented procedures can also stop a minor incident from becoming a major crisis. And remember, it is key to note that you, as the hotelier must control the crisis, the crisis must not control you.


  Theories and Methods Employed in Managing Crisis

In the situations of the crisis, usually progress in cycles of pre-catastrophe, catastrophe and post-catastrophe. The firm begins from a usual situation and ultimately going back to it. It is the occurrences between these levels of familiarity that are of goals of this study. There are different standards that have been developed in the field of crisis management, with most frameworks of best practice are from experiences. For this industry a particular model was customized (Buchholtz, 2003). The main subject in crisis management is the advance preparation: there are some key decisions that should be arrived at before the crisis itself. These are the training for crisis management & acirc; €Â prevention planning and quick response, in order to achieve effective crisis management, it should be performed proactively with the goal to protect and defend the interests of the firm. In spirit, crisis management is part of the strategic methods planning from a firm.

In order for a firm to be prepared to act against a crisis, the management requires to get ready ahead in advance (Chong and Nyaw, 2002). The most common issues to a company are: fire, labor accidents, wreckages, economic crisis and external forces. The firms are classified in each crisis situation based on its rigorousness and responded consequently. For example, if there is an unfortunate loss of life during the crisis, then this is regarded as the basic consequence and is managed by the whole team. In the same way, a technical problem that is confronted on a regular basis may not need the similar mobilization (Chong, 2004). The tourism and hospitality industry has assumed a proactive method to their media management by presenting excellent relationship between the local and national media by regular, friendly and direct communication. There are press conferences, as well as special publications like newsletters and magazines that are utilized to operate together with the media. There are direct communications that are important in crisis situations when the firm and the media cooperate to guarantee the truthfulness of any reports.

Most firms seek the help of some consultancy firms that help with crisis management, which are two of the most valuable and important services they provide. Firms should be ready for facing crisis that are possibly harmful to their reputation. In simpler words, the firm, the employees and the management should train according to the development program of crisis management: brainstorming, media training, planning, audits and simulation (Clark and Varma, 1999). The whole organization from the top management down to the employees should use these skills and tools.


  Modeling Travel and Tourism in the Wider Economy

The impacts of the 9-11 attack in New York and the related effects to the different policies on the tourism and hospitality industry can be analyzed on the U.S. economy. The government accepts all income taxes and invests it on the tourist and hospitality industry (COOMBS, 2006). The flows in the tourism and hospitality is based on the demand of the private households, both resident and domestic travels, some are for business purposes, purchasing products for tourism and travel use. For each flow in the industry, the model for the trips in the tourism and hospitality industry includes the tourism, travel and air travel. The limits in the functions of demand in the industry are transformed to reproduce the impact of the 9-11 attack on the demands in the industry, with the less attractive air travel. The model is structured so that policy on products and services is

The model is formulated so that government expenditure on goods and services is exogenous, and government expenditure on travel and tourism trips is changed exogenously to simulate the effects of September 11. The government adjusts its budget through lump-sum transfers to private households. Net foreign savings are fixed, so that the changes that are modeled do not affect international capital flows. World market prices are assumed to be determined exogenously (Anderson and Shah, 2004). These conditions are known as the government, macroeconomic and external closures. The constancy of the dollar and the GDP of the economy is the typical measure of the economic practices.


The net impact of the industry budget is the net change like in the local, state and federal, tax profits without the extra expenses during the 9-11 attack (Barton, 2003). There is an adjustment in the labor and capital constant dollar factor. More particularly, it is the constant value of dollar that moves from their employment, either into another segment or to become employed or unemployed or, in the case of the underutilized capital. It does not gauge the adjustment costs of re-tooling, re-training and expense on unemployment benefits, but it is a manifestation of the related size of these modifications costs. The relative factor modification is the same measure as the provided rate of all employment factors rather than the constancy of dollars.