As the hospitality industry continues to evolve, new risks and challenges can arise that require innovative approaches to mitigate their potential impacts. From recruiting great staff to changing customer preferences, businesses must be able to adapt and implement proactive strategies to minimise risk while continuing to seize opportunities.

In this article, we explore seven areas of emerging risks in the hospitality industry and provide some guidance to help businesses thrive in the face of uncertainty.

1. Recruiting and retaining great staff

The effects of COVID-19 have significantly impacted staff recruitment prompting talent shortages in the hospitality sector. Now, finding great front-of-house, back-of-house and management staff is a very competitive process.

There are some steps that pubs, restaurants and other hospitality businesses can take to help put themselves in a better position to attract good people. For instance, it’s a good idea to create a positive work culture, such as an inclusive and supportive work environment that values employees' well-being, growth and development.

Providing attractive incentives such as flexible schedules, healthcare benefits and performance-based rewards can be another way to attract and retain top talent. Investing in training and upskilling, so staff are equipped with the skills to adapt to changing industry demands, can be another way to help improve retention rates and help increase overall staff satisfaction.

2. Evolving work health and safety requirements

Complying with evolving health and safety regulations is crucial for hospitality businesses. This can be a demanding part of hospitality management given the multitude of risks – everything from trip hazards to spills and meeting government health and safety requirements.

It’s important to do comprehensive risk assessments to identify potential hazards and implement appropriate safety measures. This can include giving staff regular training, so they understand safety protocols and know how to handle emergency situations.

3. Enhanced sustainable practices: reusing and recycling

Many hospitality firms are on a journey when it comes to re-using and recycling, in response to shifting customer and community expectations.

Across the sector, companies are implementing waste reduction measures and optimising food and beverage inventory management to minimise waste and spoilage. Recycling programs for packaging materials, composting and responsible waste disposal are becoming business-as-usual. Many businesses are also sourcing produce locally to help support local growers and suppliers, to reduce their carbon footprint and so customers can enjoy fresh, high-quality ingredients.

4. Growing impact of climate risks

Proactive measures can help safeguard hospitality businesses as natural hazards rise due to climate change.

Conducting thorough risk assessments to identify potential climate-related threats and develop contingency plans to help mitigate their impact. For instance, it may be helpful to consider investing in climate-resilient infrastructure such as flood barriers, ventilation systems and energy-efficient solutions.

5. Changing community expectations

Community and government opinions regarding some traditional revenue sources such VIP rooms are shifting. Hospitality businesses are keeping a watching brief on topics such as these to ensure they continue to maintain their social licence to operate.

Adapting to community expectations could include introducing entertainment and live music or hosting interactive games and themed evenings to attract a broader audience. Conduct research to understand how patrons’ preferences are changing and adapt accordingly. Social media can be a useful platform for this.

6. Rising cyber risks and data privacy

With increasing reliance on digital systems, cybersecurity and data privacy are some of the critical concerns for hospitality business.

Robust data protection measures, including strict security protocols, firewalls, encryption, and regular software updates to safeguard customer data are essential.

Businesses must also have a comprehensive incident response plan to handle data breaches and minimise potential reputational damage. Speak to your broker about the cyber security protection available in the insurance market and how Xenia can help in developing an incident response plan.

7. Supply chain resilience

The pandemic disrupted supply chains globally and the hospitality sector is among the list of industries that have been affected.

Consider identifying and establishing relationships with multiple suppliers for critical products and ingredients. This way, if one supplier faces issues, you have alternatives on which to fall back on.

From customer safety to data breaches, managing risks effectively can be crucial to success in this highly competitive sector. Xenia can assist Members in understanding their risks, identifying their vulnerabilities, and developing contingency plans. If Members are interested in any of the approaches mentioned above, please contact Xenia to discuss how we can assist.

Important note:

This general information does not take into account your objectives, financial situations or needs. It is also not financial advice, nor complete, so please discuss the full details with your Steadfast insurance broker. You should consider the appropriateness of the information considering your business’ situation before you act on any information. Information in this article is subject to change.

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