21st century is a complex world, where the industries are indulging with each other to achieve cumulative gain from the international business. However, it has made the present global situation complex to operate in one hand and on the other hand it has integrated both the endogenous and exogenous factors that lies outside the operational structure of the industry (Fukuyama 2017). Under this complex situation, it has become evident that the firms are ought to face crisis situation in their operational framework. Among many industries Tourism, Hospitality and the event (THE) industry is one of the sector, which is highly elastic to the crisis that makes it essential for the managers to manage it effectively and efficiently in order to provide essential growth and sustainability (Kasemsap 2016). Endogenous as well as the exogenous factors prevail within this industry is highly potential to deter it from the natural growth path. Under this context crisis management has become a component of THE industry that possess paramount importance.
Considering the above context, this report is aimed to perform critical evaluation and application of the relevant theoretical approaches in the case of crisis management. In order to provide clear understanding about the crisis management of different sector, this report will consider the United Kingdom (UK) hotel industry with special focus to the Hôtel Des Galeries. In addition to analysing the basic theoretical framework of the crisis management in the hospitality industry it will try to envisage the response to the crisis and the risk perceived by the relevant stakeholders. Through analysing the framework of the hospitality industry of the UK the report will trace the factors that has been altered to withstand against any crisis instance in future and in addition it is aimed to provide recommendations to gauge the situation too. To conclude it will provide a summarised overview of the findings and portray what has been perceived from the analysis regarding THE industry.
Application of theory:
Present critical global scenario has affected the economic, social and political as well as the growth dynamics of the nation that has vast impact on the performance of the organisation. Under this context, crisis management is one of the major factor that can aid the firm to overcome any critical operational situation and let it drift with its natural flow (Imran, Meier and Boersma 2017). Crisis management can be defined as the mechanism through which the organisations deal with the occurrence of the unexpected or disruptive events that possess substantial amount of negative impact on the financial performance of the firm as well as economy of the nation through alteration in the employment status (Bundy et al. 2017). Depending upon the market scenario there are various types of crisis typologies is present. Details regarding the same has been detailed below:
The industry in their operation framework face various types of crisis that differ from the each other depending upon the magnitude and the nature of occurrence. Each type of crisis possess different characteristics and the implication of them are different from each other to a large extent. According to the Moutinho and Vargas (2018), there are mainly four different types of crisis typologies present, which are as follows:
In case of occurrence of the natural disasters like flood, tsunami, earthquakes, hurricanes and other climatic shocks natural crisis takes place that provide much amount of implication to the organization performance (Christensesn, Laegreid and Rykkja 2016). In addition to this, individuals and stakeholders related to THE industry face the wrath of the natural crisis in first hand due to their direct connection with the organisation.
In the event of any social or political tensions within the geographical boundary of a nation civil crisis takes places. In presence of the socio-political tension between the various countries and situation like shootings, terrorism, was, sabotage and violence emergence of the civil crisis takes place that provides substantial amount of negative impact to the organisation as well as the stakeholders of the firm too.
In case of occurrence of rapid outbreak of the epidemic diseases that spread through various place of the world without considering the geographical boundary, health crisis comes into existence. Diseases like swine flu, SARS, polio, malaria and others can be accounted as the health crisis because it has the potential to bring crippling blow to the organisational function in different sector of THE industry (Jin, Liu and Austin 2014). Customers being sceptic to the diseases the factors can put a high toil to the hospitality industry because tourists will eventually vacate the place where the health crisis is present.
This is the latest addition in the course of the crisis management because it occurs due to the machine errors, however, human error can also be accounted for the occurrence of this type of crisis. Technological crisis takes place, when there is glitches or technological failures in the organisation (Tena et al. 2017). Magnitude of this type of crisis varies widely because it can range from simple technological failure in the industry to industrial blackout where the glitches or viruses or the software failure can pose high amount of risk to THE industry (Drennan, McConnell and Stark 2014). It can be constrained within the geographical boundary and on the other hand it can surpass the boundary and spread wide transforming itself into epidemic.
Apart from these primary crisis typologies, there are other types of crisis typology present too. For instance, there is crisis of malevolence, confrontation crisis and crisis from the misdeed of the industry and it may appear from the workplace violence too that affect the sustainability, financial performance and the reputation of the organisation.
Theoretical approach in crisis management:
Over the year it has been observed that crisis in the industry is one of the factor that determine the fate of the growth of said industry. With higher amount of risk there is high return too, however, when it comes to THE industry, then crisis is one of the major issue that can deter the respective firm from its natural growth path (Lehmann and Joseph 2015). Clienteles of THE industry is highly sceptical to the crisis and that makes the mangers more aware of keeping THE industry far away from the crisis. It is well documented that the better crisis management in THE industry provides better amount of growth to the firms that make them successful in their endeavours.
When it comes to the theoretical approach in crisis management, then there is various conceptual model in the contemporary organisational framework from the global perspective. Among many, the key theoretical approach of crisis management is as follows:
Strategy for crisis management:
In order to avoid the crisis in the operational framework of the firm that includes future prediction depending upon the analysis of the present endogenous and exogenous environment of the business operation strategic measurement of crisis management comes into existence. As mentioned by the Parnell (2015), most of the firms utilise a basic five step crisis management model that includes internal communication, positioning the assets, understanding the potential impact of the crisis on the organisation, introduce means of monitoring and learn and move forward in order to deter the possible trajectory of the impact of the crisis on the organisation (Cruz et al. 2016). However it may not be same always, as the method of strategic control for the crisis, depending upon the organisation different firm utilise different method, however the main aim is same – to cope up with the outrage of the ongoing crisis.
Model of crisis management:
This is another theoretical model that aids the managers to deal with the crisis. Though the implication of this model is diverged depending upon the field of implementation, however all of them includes the four basic steps of this model. As the model depicts, through the cyclical process, fours stapes of this model, namely mitigation and prevention, preparedness, response and recovery aid the firms to over from the crisis situation.
Figure 1: crisis management framework
Source: (Bundy et al. 2017)
Four steps of this model depicts (Neil 2015):
- Diagnose the probable dangers and prepare for the worse
- Select the best available option as the response to the crisis
- Challenge the crisis and recover from the death pit through monitoring
Utilising these, the firm can become potential to mitigate and prevent the prevailing crisis or deter the probable crisis.
This is another basic crisis deterrent policy that taken into account by the contemporary organization so as to prepare contingency plans. The contingency planning of this model is as follow:
Figure 2: Factors of the contingency planning
Source: (Coombs 2014)
As the figure 2 suggests contingency planning of crisis management has three different parts, which are incident response, disaster recovery and business continuity. Under the simulated framework this type of crisis management program aids the mangers and the stakeholders with essential inputs to deal the different crisis events. Through providing essential inputs to deal with the crisis, this model entails the disaster recovery strategies and helps to do the business continuity (Braun 2015). An ideal and effective contingency planning attributes as the fast execution and facilitation of genuine information that helps the managers to run the business even after crisis situation.
The above three model has been developed to deal with the crisis management through the performance of the stakeholders and the other factors related with the performance of the firm. Though these models has considered the importance of the leader under the crisis situation, however, no one has mentioned the role of the leader. This model is focused to provide a comprehensive guideline to the leaders who are supposed to guide the crisis management program (Walker et al. 2016). According to this theory, there are five competencies that a strong leader need to have in order to deal with the crisis situation. Competencies of the crisis leadership program are as follows (Sommer, Howell and Hadley 2016):
- Create trust within the organisational framework
- Bringing in positivism in the organisational framework
- Tracing the potential threats to the organisation
- Decision making skill and decision taking skill under adverse situation
- Take lesson from the previous crisis and prepare the firm for the future
These are aimed to provide potential to the leader to deal with the crisis situation. However, in practical the performance of this model has not been testified to conclude the effectiveness of this model.
Structural functional system theory:
According this model proper flow of information among the different level of the firm is essential in order to keep the firm away from the crisis like situation. Communication flow plays an essential part in order to deal with the crisis situation and thus this conceptual theoretical framework has focused on the actual and efficient flow of information. As argued by this model, with proper flow of the information managers can aware and share information to the various level of participant of the firm regarding the crisis situation, which will grow trust among within the organisation and help it to overcome the crisis like situation smoothly (Snyder and Diesing 2015).
Critical review of hospitality industry of UK with special focus on Hôtel Des Galeries:
Over the year UK has become one of the best place to visit by the tourists, however recent civic crisis in the state has caused the industry to face some amount of slug (Carlborg, Kindstrom and Kowalkoswski 2016). From the figure 1, it can be seen that the compared to October 2016, there was a drop of tourist visit in UK by 6% and the spending by the tourists has fell by 1% in 2017 compared to the 2016 (Hosco.com, 2018). According to the same source, during the year 2016, there was a rise of tourists in the country by 7% compared to 2015, however, post civic crisis it fell gradually.
Figure 3: UK tourist visiting
Source: (Hosco.com 2018)
The figure 4 highlights that the held rate post Brussel terrorism activity. From the figure below, it can be seen that there was a substantial drop in the visitor held rate by the hospitality service provider. It indicated any instance of the civic crisis cause huge amount of loss to THE industry in the form of the cancellation of visit, and refund of the booking fees.
Figure 4: Hotel held rate of UK before and after civil crisis
Source: (Hotel Designs 2018)
In the case of the Hôtel Des Galeries, it can be seen that post Brussel terror attack there were more than 255 cancellation that caused the firm both financially reputation wise too (Hotel Designs, 2018). People are sceptical to visit those place, which have earlier instance of civic crisis that deteriorates the public figure of the said hospitality service provider. The firm was forced to reduce the rate due to excessive gap in the demand of their hospitality service and supply of the same. However, the situation remain out of control for the hoteling industry owing to the 55% loss in the customers who have booked rooms for the month of May and there were whopping 95% loss in the hotel booking during the month of June (Wilczek and Blangetti 2018). It caused a crippling blow to the Hôtel Des Galeries.
Critical evaluation of the response Hôtel Des Galeries to the crisis:
Response of the government:
As the mechanism of the controlling the civic crisis, government initiated red alert in all the areas of the Brussel and following the protocol hotels were directed to follow the code of conduct of the red flag (Bundy et al. 2017). Tourists were severely checked and cars were tested with the metal detectors that allow the security of the visitors as well as the residents of the place too.
Response of the selected Hôtel Des Galeries:
Once the civil crisis took place, there were more than 255 cancellation in the Hôtel Des Galeries. In addition to this occupancy fell down to 20% during the month of June that showcase the poor condition of the Hôtel Des Galeries post civic crisis in the Brussel (VisitBritain 2018). Though there were high amount of pressure, the brand as the immediate response tried to hold the customers through providing price cuts. Though the strategy couldn’t came handy because there were 55% loss in the customers during May and 95% during June (Vanneste et al. 2016). Under this situation, the brand took aggressive cancellation policy according to their rules and 30% of the clients were made to go through strict cancellation policy. As the immediate technique to hold customer they also used to credit their booking fees to the payback policy and let the customers visit in future once the crisis is over.
Response of the investor of the selected business organisation:
Stakeholders of the Hôtel Des Galeries directed their employees to go for the strict pricing policies and not to entertain cancellation at any cost. However, it deteriorated the image of the hotel although it faced only 20% occupancy post Brussel terrorist attack (Hotel Designs, 2018).
Lessons learned from the crisis and future crisis and risk planning:
From the Brussel terrorist attack the authorities learned that there is considerable amount of gap in the security protocol and they have to tighten Hôtel Des Galeries n the same in order to restrict the future instance. Hôtel Des Galeries learned that it would be ideal for them to bring in crisis management protocol so as to control the future situation like this. A proper crisis management sector need to be developed in the country, which will be equipped with the attributes that can foresee the potential dangers and eliminate the same to restore the stability in the sector (Bundy et al. 2017)
Policies need to be adopted in order to overcome any situation are provided from two perspective. First one is from the perspective of the government and the second one is entailed on behalf of the firm. Details regarding both of them are as follows:
From government’s perspective:
- Terrorism is one of the form of the civil crisis, thus it would be ideal for the government to bring in new stringent policy in order to control the future occurrence
- As the mechanism of control, government need to train THE industry officials to handle any situation like terrorism
- It would be ideal for the government of the UK to bring in new crisis management courses so as to let people study and learn what to do and what not to during any civil crisis
From firm’s perspective:
- There is very little that the firm can do in case of civil crisis. However, the firm can train their employees to learn what they should do during any civic crisis
- Clear understanding regarding the customer policy of the brand is essential in order to deal with the constant call from the customers for the cancellation
- If THE industry wants to lower its loss due to any civil crisis, then they can bring in interactive policies in order to retain their customers and virtually force them to visit the place in future again
- Price cut can be a good option to stimuli the demand of the services, however, THE industry can use cashback or promotions to attract the newer prospect customers
From the above discussion it has been found that the crisis management is an essential part for the growth of the organisation. With the presence of the crisis, firms can face lower amount of revenue and if it can overcome the same through utilisation of the proper crisis management program, then it can lead the firm to the zenith of the success. Considering the case of the UK hospitality service, it can be seen that terrorist attack in Brussel in 2016 has caused high amount of cancellation and subsequent drop in the revenue of the firm. However, through proper crisis management program the firm has saved itself from breaking down. As the former worker of the firm entails, the Hôtel Des Galeries has learned its lesson from the said crisis event and now the firm is focused more to provide better security while drilling the contingency programs on quick frequency. Government of the locality has quickly responded to the hostile situation and managed the same with affiance, however, they can perform better with reduced response time and through having better equipment and repeated practise of the hostile situation. To conclude it can be stated that the crisis has reduced the economic performance of the UK on overall and when it comes to the Hôtel Des Galeries, then the firm is facing loss for quite some time due to the barbaric act took place during the last year. Through proper crisis management the firm can soon overcome the issue and bring the organisation back on the track soon.
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