Hotel’s grid group structure and risk management practices

Abstract

Purpose Risk management is an emerging research area in tourism and hospitality. This paper classifies hotels based on grid (control) and group (inter dependencies) structure given by the cultural theory of risk. This paper aims to understand whether hotels grouped as per grid group structure differ on risk coping strategies such as mitigation, absorption and transfer for various hospitality risks. Design/methodology/approach Primary data are collected from 112 senior managers of luxury hotels using structured questionnaire aimed to capture the grid group aspect and risk management practices. Using factor scores, hotels are grouped. One-way analysis of variance is performed on these data to ascertain whether risk management practices of various types of hotels differ. Findings Results provide new insights into hotels grid group aspect and risk-related behaviour, revealing that hotels significantly differ on risk coping and confirming that the structure of hotel – the grid and group – does impact its risk management practices. Research limitations/implications The study adds to the extant literature. For the first time, the grid group structure of hotel is proposed to impact the risk coping. Second, the risk perception study is conducted at firm level and not at individual level as done in past. Third, the paper looks at all three risk management practices and not in isolation, thus taking the risk research dialogue further. The study has not considered non-luxury hotels. Second limitation is a small sample of 112 hotels. Practical implications The study opens up a new perspective on hotel risk management. The researchers will benefit from the newer, theoretical understanding of firm-level complex structure of risk. The hotels risk professionals can benefit from understanding grid group structure and risk coping practices. Originality/value The novel approach of grid group classification of hotels is developed. Risk management practices are studied across hotel types for various risks. Study enhances the understanding of risk and grid group structure with regard to managing hospitality risk.

Factors that shape a hotel company’s risk appetite

“…The vulnerability of hospitality organisations to a wide range of risks has sparked a growing scholarly interest in corporate-level risk management, with particular focus on systematic and non-systematic risk (Chen, 2013;Kim et al, 2012;Vivel-Búa et al, 2018), risk perception (Waikar et al, 2016) and mitigation strategies (Gjerald and Lyngstad, 2015). This vulnerability has increased as the industry continually witnesses risk-taking activities by major hotel groups, mostly in the area of mergers and acquisitions (Falk, 2016) but also in the adoption of new technology in product and service innovations (Hu et al, 2009;Lee et al, 2016).…”

“…where the focus has been on debating the meaning of the concept (Aven, 2013), highlighting its role in risk management (Gontarek, 2016) and presenting different approaches to developing a risk appetite statement (Baldan et al, 2016;Berlinger and Varadi, 2015). In the field of hospitality, although there is a growing risk management literature with particular emphasis on risk perception (Le and Arcodia, 2018;Wen and Kwon, 2017) and risk treatment strategies (Gjerald and Lyngstad, 2015;Waikar et al, 2016), the concept of risk appetite has not yet been explored at any depth. Given the important role that risk appetite plays in bridging risk perception and risk treatment (Hillson and Murray-Webster, 2012), as well as in serving as a reference point for risk prioritisation and resource allocation (Lam, 2014), this exploratory study makes a distinctive contribution to the literature on risk management by identifying and exploring the factors that determine the risk appetite in a hotel company context.…”

Risk Management in the Sustainable Developmennt: Analysis of a Selected Key Industry

“…Risk management in the hotel industry is part of strategic management, which focuses specifically on prevention and reduction or elimination of the risks through specific methods and procedures. Risk management practices in the hotel industry depend on a variety of factors, including the size of the hotel and the fact whether the hotel is part of a hotel network or operated independently (see Waikar et al, 2016).…”

Conflict areas and negotiation strategies in imperfectly competitive market conditions

“…Therefore, detecting transaction costs regarding asymmetric information will be a tool for investigating how these transactions could be facilitated. Tourism intermediaries are chosen to reduce search, negotiation, information, risk (Waikar et al, 2016), uncertainty, marketing and generally transaction costs (Williamson, 1985;Peng et al, 1998;Hessels et al, 2010). The question is whether that role is successfully fulfilled according to literature and according to this research's findings (chapter 6 and chapter 7).…”

“…The term "agents" in the research and particularly in this chapter refers to the principal agent theory and should not be confused with the "traditional travel agents". As mentioned before tourism intermediaries are chosen to reduce search, negotiation, information, risk (Waikar et al, 2016), uncertainty, marketing and generally transaction costs (Williamson, 1985;Peng et al, 1998;Hessels et al, 2010).…”