Legislative Risk in Hotel Industry: A Comprehensive Analysis

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LEGISLATIVE RISK IN HOTEL INDUSTRY

Table of Contents
INTRODUCTION........................................................................................................................1
LEGAL RISK IN HOTEL INDUSTRY..............................................................................................1
LEGAL RISK AND SCENARIOS IN HOTEL INDUSTRY...................................................................1
CONCLUSION............................................................................................................................4
REFERENCES............................................................................................................................. 6
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INTRODUCTION
Rapidly changing hospitality landscape and boom in the hospitality sector is also creating a
risk for hospitality organizations. The managers and employees in the hospitality sector have
to consider several legal regulations to avoid legislative risk (Beatty et al., 2018). This report
will attempt to discuss the key legal and legislative risk and scenarios in the hospital industry
to identify the key areas that should be considered by the personnel at the hospitality
organization. The importance of effective decision making and problem-solving within the
legal limits will be evaluated along with the different legislations and regulation. The positive
and negative impact of the legislation and legal risk will be assessed.
LEGAL RISK IN HOTEL INDUSTRY
The term legal risk could be defined as potential damage or loss incurred by an organization
due to negligence in compliance with related business laws. In the hospitality industry, the
legal risk could be termed as the damage or loss caused to the company due to intentional
or unintentional avoidance of acquiescence with the related industry laws. The legal risk
may be a regulatory risk, operational risk, contractual risk, reputational risk, dispute risk,
compliance risk, and etc. (Pandey, 2018)
LEGAL RISK AND SCENARIOS IN HOTEL INDUSTRY
A hotel spans a wide array of services that encompasses regular contact with the customers,
suppliers, and employees. It functions in a legal environment that regulates the rights,
responsibilities and obligations of the organization as well as also regulates maximum safety
conditions for the consumers with the aim of minimizing the negative consequences on
employees, customers and community (Beatty et al., 2018).
For legal function and avoiding legal risk, the managers and employees of a hotel should
possess proper problem solving and decision-making skills. This enables them to comply
with the complex legal and regulatory system of the government and hotel. A proper
problem-solving and decision-making skills enable the mangers and employees to deal with
the different personalities and situations efficiently by developing practical and creative
solutions within the legal boundaries (Beatty et al., 2018). In order to inculcate and improve
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these skills, the managers and employees should prepare a professional development plan
(PDP) after analysing the personal strengths and weaknesses during the work through
Personal SWOT analysis.
Personal SWOT analysis serves as a great to identify the key areas where an individual lacks
or forte. With the help of SWOT and PDP, the managers and employees can effectively
develop the required knowledge and skills to perform their responsibilities effectively and
legally. This enabled them to mitigate legal risks through proper knowledge and decisions.
They should have proper knowledge of the legal regulations to make appropriate decisions
while functioning in the hotel to avoid legal risks (Lowrie, n.d.). The important legal
regulations that managers and employees in the hotel industry must be aware of are;
 DATA PROTECTION:
General data protection regulations (GDPR) have a great implication in the
hospitality industry as hotels require regular collection and storing of the personal
data of the customers like bank details, addresses and passport information etc.
hotels have to adhere to the GDPR law and safeguard the personal data of
customers and employees to avoid regulatory legal risks. According to the
Information Commissioners Office (ICO), the negligence and failure to comply with
the GDPR may result in the fine up to 4% of the annual turnover of the hotel or
£17million whichever is higher (Guy, 2017). Therefore, the managers and employees
have to abide by the GDPR to avoid legal risk to the personal data of the consumers
and employees.
 HEALTH AND SAFETY:
A proper arrangement of the health and safety of the individuals at the hotel is a
must for avoiding legal risk. The hotels should make proper health and safety
arrangements as per the guidelines of the health and safety at work act 2015 to
avoid a lawsuit and compliance risks at the hotel. The hoteliers have a responsibility
to ensure that the hotel premises are safe of the employees as well as guests to
avoid accidents and health and safety hazard to any employee (HSE, 2019). With
effective problem-solving and decision-making abilities, the managers and leaders
can develop a healthy and secure workplace and avoid legal risks.
 FOOD HYGIENE:
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The risks and issues related to food hygiene and hazard are very common in the
hotel industry. The food staff at the hotel is responsible for ensuring that the food is
prepared in a safe and healthy environment by preventing microorganisms and
contamination of food. By doing a proper food safety assessment a hotelier can
effectively comply with the legal responsibilities and protection of business
reputation (Sutton, 2017). In order to mitigate this legal, the hotel managers and
employees are required to have efficient decision-making skills so that they can
devise strategies to avoid legal risks and maintain food hygiene at the hotel.
 RISK MANAGEMENT:
A hotel needs to carry out a regular risk assessment to keep the hotel safe and
secure for the employees and visitors as well as to comply with the regulations.
Proper risk management supports in avoiding legal risks and penalties. The hotel
managers are required to take a holistic approach to develop and maintain effective
risk management decisions and strategies.
 LICENSING:
The hotel businesses require different licenses to legally operate in the industry.
Hotels are required to meet certain rules and criteria for maintaining the validity of
the business. The hotel has to obtain premise license, personal license, and standard
and late Temporary event notice in accordance with the licensing act 2003 Visit
Britain, 2019). The act provides the guidelines for the code of conduct within the
licensed premises and the managers and employees should mandatorily work in
compliance with these guidelines. Moreover, the hotels are also required to take a
license to serve alcoholic beverages and should abide by the legal guidelines to serve
alcohol in the hotel.
KEY PROVISIONS WITHIN HOTEL PROPRIETORS ACT 1956:
The hotel proprietors Act 1956 amend the law relating to the inns and innkeepers. This act
has been come into existence by replacing the Innkeepers act, 1863. the act defines hotel
as an establishment held out by a proprietor as offering any services like drink, food and
accommodation, without any special contract with any traveller who is willing to pay
reasonable money in exchange of the facilities and services of that establishment. The
hotels and hotel keepers are subject to the provisions of this act (Legislation.gov.uk, 2019).
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The proprietor of a hotel shall be under the like liability to make good to any guest of
his/her any damage to the property brought at the hotel. The key provisions of the act are:
This act applies to sleeping accommodations such as one that offers food and drinks
whether or not under a special contract. It applies to the guests who have engaged with the
sleeping accommodation and their belongings and motor vehicles received or parked within
the hotel premises (Legislation.gov.uk, 2019).
This act determines certain liabilities and rights of hotel proprietors. The proprietors are
liable for the loss and damage caused to the guest or his/her property during the period of
the stay at the hotel. The property of the guest must be received the proprietor or staff. The
property must be damaged, lost or destroyed during the time of the engagement with the
hotel (Legislation.gov.uk, 2019). On the other hand, the proprietor is not liable for any loss
or damage caused due to any unforeseen and irresistible act of nature or war or the
negligence of the customers or anybody accompanying or visiting him. In order to avoid
legal risks, the Hotel manager should ensure that the statutory notice is prominently
displayed and reviewing staff training and proper security on the site.
CONCLUSION
To legally manage and organize the hotel functions and the system is utmost important for
the managers as its negligence and avoidance could lead to serious issues and legal risks to
the company. The breaking of legal obligations and breaches of law could result in the cost
of civil or criminal actions against the organization. Before becoming a successful hotelier, it
is important to consider several laws, regulations and codes. Here, the importance of the
key legal obligations and regulations regarding, data protection, health and safety, licensing,
food hygiene and risk assessment have been evaluated to facilitate legal compliance of the
hotels. These legal regulations have both positive as well as negative implications on the
hotel.
The key positive implication of the legal system and regulation in the hotel industry is that it
encourages ethical business practices and an organized system of working within the
hospitality sector. It supports protecting the rights of the customers as well as hotels by
providing a legal system to solve disputes and issues (Thompson, 2019). The proper legal
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system also facilitates the hotels to avoid competition by preventing unorganized and illegal
businesses in the industry. However, the legal system does have some cons too as it
increases the complexity of the business operations in the industry and unintentional legal
risks may lead to serious loss to the hotels. Therefore, it is very important for hotel
managers and employees to have proper knowledge about the regulations to successfully
and legally operate in the industry.
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REFERENCES
Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment.
Cengage Learning.
Guy, A., 2017. The importance of GDPR compliance within the hotel industry. (online)
available at https://www.linkedin.com/pulse/importance-gdpr-compliance-within-hotel-
industry-andrew-guy Last accessed on 26th July 2019.
HSE, 2019. Risk management. (online) available at http://www.hse.gov.uk/risk/ Last
accessed on 26th July 2019.
Legislation.gov.uk, 2019. Hotel Proprietors Act 1956. (online) available at
http://www.legislation.gov.uk/ukpga/Eliz2/4-5/62 Last accessed on 26th July 2019.
Lowrie, L., n.d., Importance of Knowledge of laws in the hospitality industry. (online)
available at https://yourbusiness.azcentral.com/importance-knowledge-laws-hospitality-
industry-28120.html Last accessed on 26th July 2019.
Pandey, A., 2018. Most common legal risks a business might face and how to avoid them.
(online) available at https://blog.ipleaders.in/legal-risks/ Last accessed on 26th July 2019.
Sutton, D., 2017. Food Safety Tips for Hospitality Management. (online) available at
https://www.foodqualityandsafety.com/article/hotel-food-safety-risks/ Last accessed on
26th July 2019.
Thompson, J., 2019. Negatives & Positives of the Hospitality Industry. (online) available at
https://smallbusiness.chron.com/negatives-positives-hospitality-industry-34993.html Last
accessed on 26th July 2019.
Visit Britain, 2019. Alcohol and entertainment licensing. (online) available at
https://www.visitbritain.org/business-advice/alcohol-and-entertainment-licensing Last
accessed on 26th July 2019.
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