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Question :

Discss about the Facility and Risk Hospitality Operation ?
 
 

Answer :

Introduction

Risk is present everywhere in those places where the competition is present in the market. It has been seen that in last few years, the hotel industry is also in the influence of the risk. The hotel industry is also facing the down fall in terms of business because of recession in the economy of world. There are many factors such as terrorist attack and natural environmental risks, which affect the business operations of hotel industry. Risk is the important feature in the hospitality. There can be various risks while operating the business in the hospitality industry. In other words, it can be said that risk can be related to all the operating terms in the industry such as risk to human assets, and risk to financial assets (Kim, Lee, & Ham, 2013).

                                                                                                   Figure 1: Various Risks                           

                                                                                           (Source: Kim, Lee, & Ham, 2013)

Based on the research of different authors on the different catagories of risk, it is clear that there are various catagories of risk available in the hospitality industry. This report is basically focused on the notion of the risk associated with the hospitality industry. Along with this, the report will also focus on the venue risk analysis based on the previous assignment. For the venue risk analysis, the hotel Grand Roxy will be taken.

 

Part 1

The notion of risk

Risk can be described as the combination of the consequences with the expected events. Basically, there are consequences and hurdles that can be threats for the success of any industry. There are various risks that can take place in the hotel industries. There are many researches who gave different alternatives about the risk based on their readings and researches.  For example, the finance researchers see the risk based on financial perspective; examine the risk in terms of profit and the sources of government focus on the risk based on safety point of view. Based on the various points of studies, the risk can be categorized in the different sectors. Basically, researchers have divided the risk into four categories i.e. risk to financial assets, risk to physical assets, risk to human assets and risk to non-physical assets (Carlino, 2014).

                                                                                              Figure 2: Risks in Hotel Industry

                                                                                                       (Source: IDA, 2010)

Risk to financial assets

Financial assets are important for the business activities in the organization as they show the monetary value of the services provided by hospitality sector. Financial asset in the hospitality industry can be described as the cash which is given by the customers for the provided services in the hotel. Basically, financial assets are the kind of contractual right to receive the cash from another entity such as guest and the customers and the agreement to pay for the services used. From the definitions, it is clear that hospitality industry should have fair understanding of financial assets in the business. Risk in the financial assets can be theft, and fraud. Along with this, there can be multifarious risk such as foreign exchange rate, interest rate, and broken contracts. Profitability can also be an issue in the financial assets risk (Chan, & Lam, 2013).

Risk to physical asset

Another category of risk is risk in physical asset. The physical asset in the hospitality industry includes vehicle, building and equipments, gardens and pools, fixtures furnishing and fittings, stock and documents, ride and games, and property of shareholders in the company such as member, guests and staff. Risk in this category can take place due to the various resources such as lack of training and mishandling of equipments. There can be theft and misuse of the things in this category. If there is unmanaged garden and premises, there will be the risk of damage to the people or other physical assets (Aven, 2012).

 

Risk to human assets

Human assets include the name of various shareholders with the hospitality industry. Basically, human assets include customers, guests, visitors, members, owners, sub-contractors, staff member, management and the members of the community in which the enterprise is operating. The human assets should be managed carefully by the hotels. The human asset need more care. The risk of human asset in the enterprise can be very costly to handle. Management of the hotel needs to work for long time to overcome from this risk. Along with this, during the recovery from this risk, there is the need to compensate by the management. To overcome from human assets risk, there can be large settlements, legal cost, and loss of business due to damage (Bharwani & Mathews, 2012).

Risk to non-physical assets

The last category of risk is non-physical assets risk in the hospitality industry. As the name of this asset, these are intangible category assets so it is difficult to manage the non-physical assets. Management of the enterprise should focus on the different elements of the assets. Non-physical assets of the enterprise include workforce motivation, copyrights, computer programs, intellectual capital, brand name, brand image, patents, intellectual property, company reputation and customer relations. There are many managers who are unaware of non-physical asset in the enterprise. To protect the enterprise from this type of risk, it is important to create awareness about the risk among the managers. By creating the awareness, enterprise will be able to overcome from the damage of the risk (Herrero, & Martin, 2012).

Importance of risk management process in the hospitality industry

It is clear from the above stated risk that it can be dangerous for every organization. There is the need to manage the risk effectively in the hospitality industry. It is necessary to identify the risk and then it must be evaluated by the management of the enterprise. Risk management is the important part of the strategic management in the organization. It is the process by which the enterprise identifies and addresses the risks with their outcomes (Mundt, 2008). The main aim of the risk management is to identify and treatment of the risk. The objective of the risk management is to maintain the sustainable value of the enterprise in the industry. Along with this, it is also helpful in increasing the profitability of the enterprise. The process of risk management must include effective policy and program. Step by step planning will be helpful to overcome from all the risks associated with the operations in the hotel industry (Grace, Leverty, Philips & Shimpi, 2015).

                                                                                                              Figure 3: Risk Management Process

                                                                                                                        (Source: Tang, 2006)

In the above figure, the risk management process is described. Risk in the enterprise is discovered by the management, member or staff. Management then should evaluate the risk and make the decision to overcome form the risks. The management has to accept the risk and has to prevent the enterprise from those risks (Tang, 2006).

Part 2

Risk ranking system

To get the value and appreciation for the risk management system form all the stakeholders in the enterprise, the management has to take strategic decisions. In order to implement the successful risk management process in the organization, it is important to measure the range of risk (Rittichainuwat, 2013). By the measurement, management will be aware about the potential risk in the industry. According to Kohr, risk ranking is the crucial part in the risk management process and this can be divided into three parts. These three functional parts are interrelated and help to classify the risk based on the ranking (Israeli, 2007). Those functional areas are frequency, cost and severity. Along with this, there is the concept of Risk factor value in which the risk will be ranked based on the cases of accidents. In the risk ranking system, there are two types of ranking based on measurements i.e. reversed ranking and uninformative ranking. Reversed ranking includes those cases which have highly rated risk and on the other hand uninformative ranking includes those cases in which all the small and big risks are associated and have severity ranking (Aven, 2009).

 

Venue Risk Analysis (VRA) form

There can be various risks in a hospitality industry such as operational risk, political risk, and market risk. To identify and analyze the risk in the industry is very important. In this report, the risk assessment will be done with the venue risk analysis form. For the discussion, hotel Grand Roxy will be taken. The venue risk analysis is focused on Grand Roxy receptionist that is situated in Brighton-Le-Sands near Sydeny International and Domestic Airports. Having the grand size, the hotel can serve about three hundred guests. In this report, all probable risk will be analyzed effectively. In terms of design, the location of Grand Roxy is the subject to criticism because the location of the hotel is near the beach which is the subject to additional cost of repairing. The Grand Roxy is used for various occasions, business parties and meetings. There can be various risks during the business meetings and occasions such as fire, electricity, fall from height, slip, strips and falls, leasers, smokes and fogs, glazing and mirrors, gas, High temperatures, and violence (DeMicco, 2007). First of all, the risk will be identified that are to be managed by the risk management system. After that the risk rating will be set in terms of numbers. The risk will be numbered on the basis of the frequency. The format of the risk rating is given below:

                                                                                              Risk Rating

Hazard

(Severity)

Value
Risk

(Likelihood)

Negligible

1

Unlikely

Slight

2

Possible

Moderate

3

Quite Possible

Severe

4

Likely

Very Severe

5

Very Likely

On the basis of this criterion, the risk will be numbered so that the most harmful risk can be identified. By the risk rating, the hotel will be able to overcome from those risks that affect the business operation in the industry (Kim, Farrish & Schrier, 2013). The identified risk and the venue risk analysis form are described below:

 

SIGNIFICANT HAZARDS IDENTIFIED

 

PERSONS AT RISK

RISK RATING

 

CONTROL MEASURES

Hazard x Risk = Risk

                            Level

Fire

Staff and public may be at risk seriously, possibly serious burn, injuries from smoke breathing, structural crumple.

 

 

4

 

 

3

 

 

12

Management should constant check the equipments to make sure all controls in fire risk.

Electricity

Due to electric shock or burns public and staff may be suffered; injuries can be happened because of faulty electrical installation or equipments.

 

 

5

 

 

4

 

 

20

All the electrical equipments should by a component person in a planned inspection programme; staff should be trained to check the damaged cable, and to check defective equipment.

Falls from heights

Employees or staff members may suffer more, injuries if they fall from height, For instance, staff doing cleaning or maintenance, or fixing of lights, they may fall from ladders, there may be serious injury if they struck by the glasses during fall.

 

 

5

 

 

4

 

 

20

Ladders should b e suitable; daily inspected, and should be used for light work and for short duration. The work in the height should be done by the contractor or by trained staff. For the lighting work, authorized staff should be hired. 

Slip, strips and falls

Staff and guest may suffer serious, can face serious injury such as fractures if they fall from the stairs.

 

 

3

 

 

2

 

 

6

All the carpet should be firmly secured, there should be good housekeeping, electric cables should be managed properly, and there should be proper lighting especially on stairs.

Leasers

There may be the risk of eye damage of staff and guests if they use it improperly.

4

3

12

This should not be used without proper permission and licensing.

Smokes and fogs

Employees may suffer from skin damage while handling dry ice. Fumes and fog can be the cause of irritation in eyes, nose and breathing.

4

3

12

Only trained worker should access those products, these products should be kept in safe and secured places such as locked containers.

Glazing and mirrors

Staff and guest may suffer from serious injury from impact of mirrors and windows that are not plain.

5

4

20

Marking should be done where the glass is evident, there should be no mirror where might be the risk of confusion.

Gas

Staff, employees and others have risk of injury from the fire if not properly maintained and used.

4

 

3

 

12

 

The boiler should be checked and serviced annually by a Gas safe registered engineer; staff should be trained for the rescue process.

High Temperature

Dehydration and fainting may be happened to staff and guests due to high temperature.

5

4

20

There should be proper ventilation for the supply of fresh air, there should be air conditioning in hot weather.

Violence

Staff and public may face serious risk and injury, if caught up in the fight.

4

5

20

Staff should be trained to stop the trouble makers, CCTV system should be placed properly, overcrowd should not allowed in the hotel.

Hazard Value x Risk Value = Risk Level

                                                                                                   Ranking of Risk

                                                                                                       (Risk Level)

1 – 4

Low Risk

5 – 15

Medium Risk

16 - 25

High Risk

 In the above table, the level of risk can be measured. According to the risk rating, the risk which comes under the number of 1 to 4, that is low risk. Further, which risk comes under 5-15, that is medium risk and which risk comes under 16-25, that is high risk. Low risk means the risk can be acceptable, medium risk means the risk is acceptable with sufficient measure control in the place and high risk means the action must be taken on the highest priority to reduce the risk. Based on the above Value risk analysis form, it has been observed that in the Grand Roxy, the risk has been categorized according to the risk level. It can be seen that the risk of fire, Slip, strips and falls, Leasers, Smokes and fogs, Gas are the medium risks which are acceptable by some control. Electricity, Falls from heights, Violence, High Temperature, and Glazing and mirrors are high risk because they can be the cause of sudden death or can harm badly (Herrero & Martin, 2012).

Recommendations

There are some recommendations to implement the risk management process and overcome from the risk in hotel industry. The recommendations are:

  • Hotel should focus on their risk management process to deal with the risk of different catagories. There should be effective strategies to prevent from the risk.
  • Industry should create the right culture for the employees. Right culture will motivate the employees to overcome from the risks.
  • Along with this, company should clarify the roles and responsibilities of the employees so that they don’t face risk in future.
  • Company should recognize the limitation of risk assessments by identifying risk in the business.
 

Conclusion

This report has been discussed on the notion of the risk associated with the hospitality industry. Along with this, the report has been focusing on the venue risk analysis based on the previous assignment. From the above discussion, it has been analyzed that there are many factors such as terrorist attack and natural environmental risks, which affect the business operations of hotel industry. There are various risks that can take place in the hotel industries. So, risk can be divided into four categories i.e. risk to financial assets, risk to physical assets, risk to human assets and risk to non-physical assets. Thus, Management should evaluate the risk and make the decision to overcome form the risks. For the evaluation and assessment of the risk, the Value risk analysis form has been given in the report. There can be various risks during the business meetings and occasions such as fire, electricity, fall from height, slip, strips and falls, leasers, smokes and fogs, glazing and mirrors, gas, High temperatures, and violence. For the ranking of risk, the numbers to the risk has been given. The risk which comes under 1 to 4 is low risk. Further, which risk comes under 5-15, that is medium risk and which risk comes under 16-25, that is high risk. So, it is concluded that risk management is very important for the success of the hotel industry.

 

References

Aven T., (2012), The risk concept-historical and recent development trends, Reliability Engineering and System Safety, (99), 33–44

Aven, T. (2009), Risk Analysis, Assessing Uncertainties Beyond Expected Values and Probabilities, England: Wiley

Bharwani, S., & Mathews, D., (2012), "Risk identification and analysis in the hospitality industry: Practitioners' perspectives from India", Worldwide Hospitality and Tourism Themes, Vol. 4(5), pp.410 – 427

Carlino, N., (2014), Owners/operators share their top technology needs, goals, Hotel Business, Tech Trends, pp. 18-26

DeMicco, (2007), To Be Secure or Not to Be: Isn’t This the Question? A Critical Look at Hotel’s Network Security, International Journal of Hospitality & Tourism Administration, 8(1), pp. 43-59

Chan, W., Lam, D., (2013), Hotel safety and security systems: Bridging the gap between managers and guests. International Journal of Hospitality Management, 32, 202-216

Grace, M.F., Leverty, J. T., Philips, R. D. & Shimpi, P., (2015), the value of investing in enterprise risk management, The Journal of Risk and Insurance, 82(2), pp. 289-316

Herrero, A. & Martin, S. H. (2012), Effects of the risk sources and user involvement on ecommerce adoption: application to tourist services, Journal of Risk Research, 15(7), pp. 841-855

Herrero, A. & Martin, S. H., (2012), Effects of the risk sources and user involvement on ecommerce adoption: application to tourist services: Journal of Risk Research, 15(7), pp. 841-855

Israeli A., (2007), Crisis-management practices in the restaurant industry: International Journal of Hospitality Management, 26: 807-823

Kim, H., Lee, D. & Ham, S., (2013), Impact of hotel information security on system reliability, International Journal of Hospitality Management, 35, pp. 369-379

Kim, J. S., Farrish, J. & Schrier, T., (2013), Hotel Information Technology Security: Do Hoteliers Understand the Risks?, International Journal of Hospitality & Tourism Administration, 14, pp. 282-303

Mundt, A.P., (2008), Dynamic risk management with Markov decision process, Karlsruhe

Rittichainuwat N.B., (2013), Tourists’ Perceived Risks Toward Overt Safety Measures. Journal of Hospitality & Tourism Research, 37,199-213

Tang C., (2006), Perspectives in supply chain risk management, International Journal of Production Economics, 103, 451–488

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