When it comes to hospitality risk management, many hospitality businesses have room service, hotel food and beverage services, and direct customer service to consider. From hotel staff-related risks to the food and beverage director to room service staff, hospitality businesses cover a lot of ground.
It’s like risk assessment for a restaurant and home-away-from-home all in one. It can even come into play with some of the top 25 Michelin Star restaurants. Hospitality risk management covers everything that could be a risk in a hospitality business. That’s a lot of boxes to check, and a lot of people working together to keep risk at bay.
Whether you’re a hotel owner, a lodge manager, or you’re looking to get into the hospitality industry, there’s plenty to learn about risk management. Learning everything you need to know can help you prepare a great business plan and execute the best customer service. It also keeps your business safe from any potential legal troubles, from liability claims to workers compensation.
In this BinWise blog post, we’ll walk you through different risk factors in the hospitality and hotel industry. We'll also take a look at risk assessment practices you can use to manage risk. Those two factors together will help you prepare to run or work in the hospitality industry with a healthy awareness of risk, and the tools you need to minimize risk every day.
6 Risk Factors In the Hospitality Industry
The potential areas of risk in the hospitality and hotel industry are similar to those in restaurant and bar business settings. However, some are room- and guest-specific. Overall, the areas of risk in a hospitality business can be found in every room and every function of the business.
A hospitality business–like a hotel, motel, or similar establishment–is a combination of otherwise disparate service offerings. It contains everything from food and beverage services, to special event settings, to every nuance involved in the rooms for guests. The effects of inflation–even food inflation–come into play as well.
These six risk factors in the industry show the scope of what you have to be aware of in hospitality risk management. They range across a hospitality business’s varying departments and corresponding needs. They also include some back-of-house (BOH) risks, as the back-of-house department of a hospitality business is equally important.
6. Liquor Liabilities
Anywhere liquor is sold and you’re stocking a bar, there are liquor liabilities. In a hotel bar, it’s hard to know where your guests may be headed after they’ve had a drink or two.
The best thing you can do is keep tabs on how many they’ve had with you. You should also keep an eye on areas like the pool for safety measures.
When you confirm your business’s status as a place that is licensed to sell alcoholic beverages, you take on the responsibility of serving guests. Your state will have its own rules about what your responsibilities are toward guests and their consumption of alcohol. BinWise isn’t a legal advisor, be sure to check your regulations to make sure you check every box.
4. Hazardous Chemicals
Cleaning is a big part of keeping hotels and hospitality businesses ready for guests. This is even more important given the recent COVID-19 pandemic. There are more stringent bar cleaning checklist rules and hotel standards. Of course, this brings with it the hazard of dangerous chemicals.
The best way to avoid risk with these chemicals is to keep them in the hands of the cleaning crew. That can mean either on carts or in a locked store room. You should also have a specific section of your inventory management system devoted to these chemicals.
5. Common Safety Hazards
The most common safety hazards in a hospitality business are slips, trips, and falls. To avoid these risks, make sure your carpets are well-maintained and keep wet floor signs available. Additionally, it's a good practice to have stairs and steep areas lit up for greater visibility at night.
Your precautions for these common safety hazards keep your business safe for guests and staff alike. These precautions and solutions should be implemented everywhere. That includes all front-of-house and back-of-house locations where there is heavy foot traffic.
3. Special Event Management
Special event management–from the banquet server work to the banquet manager job to banquet table setup ideas– is a unique type of risk. Events, from parties to corporate functions, bring together food and beverage risks and general guest satisfaction and safety risks. A full risk assessment and plan is needed for the event management department.
When it comes to the management of special events and their risk factors, it’s best to have one person overseeing the entire operation. This person should have no other tasks under their responsibilities. This will help to ensure your events go smoothly and leave guests satisfied.
2. Property Damage
Some amount of property damage is bound to happen from time to time with so many guests moving through the hotel, bed and breakfast, or other hospitality space. Property damage can be as small as a bit of chipped paint on the wall to as large as a broken nightstand. It can be hard to avoid, as guests are unpredictable.
The best risk management plan is to have a budget set aside for damages. On top of that, you should have a liability and property damage waiver included in your room agreements. With guests signing a waiver that says “You break it, you buy it” you’re less at risk of careless mistakes.
1. Food Safety
Food safety is paramount in a hospitality business. From in-house restaurants to room service to catering, a lot of food moves through a hotel. With all that food, food safety is a top need to meet–for everyone. The best way to mitigate it is to have operational efficiency in the kitchen and food storerooms.
This operational efficiency starts from the top chef and food and beverage management. It’s also vital to have everyone in the food preparation process be fully aware of every safety measure required. When the team works together to ensure safety, the food being served will be of the highest quality in every possible way.
Risk Assessment In Hospitality Industry: 3 Risk Assessment Practices
Risk assessment in hospitality industry businesses is nearly identical to the practice of risk assessment in other businesses. The only different factor is the fact that guests are involved. Of course, other businesses have customers too, simply in a different capacity.
Since guests are ‘round-the-clock factors in hospitality businesses, they play a greater role in the assessment. In hospitality businesses, guests are the one thing you can’t ever fully predict.
Because of that, they are the one thing you need to plan for the most in risk assessment. These following three risk assessment practices for hospitality businesses all take into account the presence of guests:
"Key Takeaway: Hospitality risk management is vital to the success of a hospitality business. From room service to lobby safety to banquet event ideas and planning, there are plenty of areas with risk potential."
3. Lobby Danger Zones
The lobby is a place with many risks. Such risks include slips and falls near the entrance to baggage mishaps. A mapped out risk assessment with procedures in place and necessary equipment–like baggage carts–will help avoid cluttering up the lobby with risk.
Your lobby risk assessment should be worked through on a quarterly basis. It’s a fast-paced space, and your attention to risk management should reflect that.
2. Food and Beverage Examinations
We’ve said it before, we’ll say it again: you don’t want to mess around with food and beverage safety. An assessment of safety standards from the kitchen to the room service trays will show you the spots you need to watch. It starts with food preparation and storage and leads to making sure room service food is served in a timely manner to avoid spoilage.
Your food and beverage examinations are an ongoing process in your hotel or other hospitality business. While you should do a full overhaul of your food and beverage service on a regular basis, each day should have procedures in place to manage this space.
1. Room Service Assessments
Room service covers everything from food and beverage delivery and cleaning to general room needs–like extra blankets or toiletries. The best way to perform a risk assessment for room service needs is to make a list of everything a guest could need. From there, follow the path of that item or service to the guest, and mark down any areas of potential risk to find solutions.
Risk assessment for room service should be reevaluated twice on year on average. If you notice larger issues cropping up, it can become a quarterly need, but twice a year is generally sufficient.
Frequently Asked Questions About Risk Management In Hospitality
Every facet of a hospitality business, from front of house (FOH) management to risk assessment and management, requires a lot of background knowledge. The industry covers a lot of ground and no matter what your role is, there’s plenty of information you should know. Our answers to these frequently asked questions below will help to get you started.
Why Is Risk Management Important In the Hospitality Industry?
Risk management is important in the hospitality industry because of how busy the industry is. At any given moment, a hospitality business is juggling food and beverage management, guest satisfaction, cleaning and maintenance, and general business operations like accounting. Risk management is needed to keep all of that running smoothly.
What Is Risk Assessment In Hotels?
Risk assessment in hotels is the assessment of anything and everything in relation to hotel operations. For hotels, risk assessment covers everything from issues in room service, to ingredient counts at the breakfast buffet, to towel availability at the pool. Essentially, risk assessment covers every inch of hotel operations.
Is Risk Management Essential In the Tourism and Hospitality Industry?
Yes, risk management is essential in the tourism and hospitality industry. Tourism and hospitality businesses are often the main sources of economic growth for the locations they are in. When it comes to high-profit businesses, you don’t want to have too much wiggle room for risk.
The tourism and hospitality industry is also a place with a high potential for risk. This is because of how many people it caters toward. People are the unknown factor in every situation. When you have a hospitality or tourism business, it’s imperative that you manage risk as best as you can, to avoid issues and keep things running smoothly.
What Are the Risks Involved In Running a Hotel?
Overall, some of the main risks of running a hotel involve slips, trips, and falls; property damage; and food spoilage. Slips, trips, and falls are a risk both for hotel staff and guests. Property damage tends to happen over time with different guests staying in the hotel. Food spoilage is a risk anywhere food is served.
Risk In Hospitality: Be Hospitable, But Not at Your Own Risk
Hospitality risk management is vital to the success of a hospitality business. From room service and lobby safety to banquet event ideas and planning, there are plenty of areas with risk potential. One risk area that spans the business is everything to do with hotel inventory and order management.
If you’re looking to streamline your inventory management, check out BinWise Pro, our inventory management system software. Paired with the BinScan mobile app as a comprehensive inventory program, BinWise helps you maintain inventory standards. Our software gives you one less thing to worry about in your risk assessment and management.