Natural Disasters vs Hotel Industry Resilience: An Exploratory Study among Hotel Managers from Europe

2.1 Natural Disasters

Natural disasters are catastrophic events resulting from environmental factors that cannot be controlled [23]. Similar explanation was given by Mileti [34] who describes a disaster as a natural phenomenon, i.e. natural hazards interact with environment, causing societal disruption. These natural disasters strike when people least expect, often without warning or enough time to prepare. According to EM-DAT classification [35], the main natural disaster subgroups include geophysical, meteorological, hydrological, climatological, biological and extraterrestrial events. They occur in various forms: earthquakes, tsunamis, volcano eruptions, hurricanes, typhoons, floods, wildfires, etc. Contrary to the aforementioned, Mileti [34] states that those disasters are predictable and avoidable to some extent. Brown et al. [22] also see disaster as a sudden and externally triggered event which affects society, requiring response and recovery. Perry and Quarantelly [36] look at disaster as an extreme event with a natural, technological and social causes that has numerous consequences, including disruption. They basically happen every year in some part of the world and affect hotel and tourism industry all the time. Moreover, Faulkner [9] states that tourism destinations in every part of the world are exposed to disasters.

One of the most complex definitions of natural disasters is set by the World Health Organization (WHO) in 1971 in their Guide to Sanitation in Natural Disasters: "A natural disaster is an act of nature of such magnitude as to create a catastrophic situation in which the day-to-day patterns of life are suddenly disrupted and people are plunged into helplessness and suffering, and, as a result, need food, clothing, shelter, medical and nursing care and other necessities of life, and protection against unfavorable environmental factors and conditions" [37, p.14].

Basically, all previous definitions of disaster contain disruption as a main element in their explanations. This is also noticed by Rodriguez et al. [38] who point out social disruption. As we intend to follow up the work done by Brown et al. [29], the current study is based on their definition of disaster and further discussions will refer to disaster as: “A sudden event where trigger is outside the current control of the affected area (community and/or business), the event disrupts the function of that area and requires additional resources (other than those available within the area) to respond to and recover from the event” [22, p.363].

The Munich Re NatCatSERVICE registered 850 events in 2018, and Europe was the third most affected continent (14%). The most frequent events were floods and landslides (46%), storms (42%), followed by extreme weather conditions and wildfires (7%) and earthquakes, tsunamis and volcanic eruptions (5%). Unfortunately, this distribution represents the long-term trend towards more frequent storms and floods [39].

2.2 Natural disaster resilience

Hotels continuously invest in disaster prone areas, where risks are high and disasters unpredictable, that leads to inappropriately addressed fundamental problems. Hotels can usually improve a destination’s disaster preparedness with access to an emergency response system [40]. However, The UNISDR Global Assessment Report 2013 reveals that the hotel industry is able to manage small disasters but not the extreme ones due to lack of the capabilities to reduce those risks and to stay prepared [41]. Moreover, as summarized by Brown et al. [22], the ability of hotels to upgrade its disaster preparedness is very limited.

In academic literature related to disasters, the definition of resilience is usually described as the ability to survive and overcome a disaster with as small impact and damage as possible [42] or to recover with minimal social disruptions [43]. Furthermore, the research on hazard resilience also includes prevention and preparedness for the disasters [43, 44, 45]. Interestingly, Mileti [34] describes sustainability, in the context of natural disasters, in a much similar way resilience is described nowadays, emphasizing the ability to tolerate and overcome damage caused by a large scale event. This ability is highly influenced by social and economic networks [46].

Among numerous definitions, the International Organization for Standardization (ISO) defines resilience as the adaptive capacity of an organization (or community) in a complex and changing environment [47]. An explanation of resilience given by UNISDR [48], has community and society in focus and their ability to resist and recover from disastrous events in a timely way, retaining all core functions. As an obvious overlapping point of the aforementioned definitions of resilience is the concept of community and its capacity to survive disruptions and disasters, to adapt and persist in its business activities.

With the aim of establishing this capacity, communities concentrated on creating capitals, primarily social and human. These capitals specifically aid a community in overcoming disastrous events [49]. Due to numerous suggested definitions, it is important to frame a definition as a foundation for the following discussion. Thus, in this study, the natural disaster resilience is referred to as the capacity or ability of a hotel to predict, prepare for it, act, and most importantly recover from its impacts.

Based on the extensive literature review regarding natural disaster resilience within the hotel industry it has been noted that previous experience in natural disasters represents one of the key elements that highly influence risk perception of such disastrous events [50]. Some studies [10, 41, 51, 52, 53, 54, 55] have found that previous experience positively affects disaster risk perception and generally enhances development of this segment of business practice. Therefore, two initial hypotheses can be proposed:

H₁: Hotel managers who previously experienced natural disasters while being in managerial position have a better perception of natural disaster resilience.

H₂: Hotel managers who previously experienced natural disasters in life generally have a better perception of natural disaster resilience. Although few scholars examined the relation between organizational age and crisis [56, 57, 58], none of those studies investigated the relation between managerial experience period and hotel resilience. Given that, for the purpose of this study another hypothesis is suggested:

H₃: Hotel managers with longer managerial experience have a better perception of natural disaster resilience. Additionally, very few studies [41, 55, 57, 59, 60] have noted evidence regarding the link between organization size or hotel category and crisis planning. Thus, the following hypotheses related to organization size and hotel category and natural disaster resilience of hotels are proposed in this study:

H₄: Higher hotel category positively affects the perceived level of natural disaster resilience.

H₅: Larger organization size positively affects the perceived level of natural disaster resilience.

2.3 Capital predictors

This paper uses a multi-capital based approach [61] as a framework to assess natural disaster resilience within hotel industry. It focuses on five major and independent capitals: Economic (e.g. financial resources, diversity of income, savings, investments, credit availability, insurance coverage, etc.); Social (e.g. community and social networks and ties, external communication, norms, trust, capability to work as a group, etc.); Human (e.g. education field, education level, knowledge and skills, training, work and disaster experience, demographic characteristics, health, transportation options, etc.); Physical (e.g. local geography and environment characteristics, buildings, infrastructure – including roads, electricity, water supply, telephone coverage, emergency resources as police, hospitals, evacuation plans, etc.); and Natural (e.g. hotel location, environmental risks, natural resources, local eco systems, impact of hotel activities on destination sustainability, etc.). Some authors [22, 24, 29] additionally included in their research Cultural capital that primarily focuses on knowledge about local culture and cultural influence on social environment. According to some authors [62, 63], this cultural capital can be merged with social capital into Organizational capital. Following this practice and taking into account the feedback from field professionals during the instrument development, we also combined them in this study.

The main advantage of the multi-capital approach is the fact it includes the most important capitals necessary to understand and examine disaster resilience. Furthermore, each capital consists of different predictors that measure specific community resilience to natural disasters. These capitals, in the context of resilience, were a topic of many studies, summarized lately by Brown et al. [22] and Brown et al. [24], and used as a foundation for the research of the same authors [29].

Although practical and not very new, capital based approach is rarely used for research within the hotel industry. Moreover, the literature often presents this concept as closely related and linked to the concepts of sustainability and disaster resilience [34, 64]. Hence, it is interesting to note that literature on multi-capital approach in the hotel industry remains scarce.

3.1 Study area

The hospitality sector is one of the main drivers of the European economy and tourism. This sector supports employment greatly and makes direct, indirect and induced contributions to the economies of European countries. Additionally, it supports 16.6 million jobs in Europe, 11.1 million jobs directly representing 7.8% of the European workforce or 80% of the total EU tourism workforce [65]. Newer studies showed a further industry growth - the industry alone provides 11.9 million jobs and created 1.6 million new jobs between 2013 and 2016. Together with tourism, it is the third largest socio-economic activity in Europe [66]. Moreover, the results from 2017 suggest favorable perspectives for European hoteliers - European hoteliers positioned on the economy segment posted the strongest growth [67]. This trend continued in 2018, as the European hotel industry was still growing healthily [68].

While the numbers representing industry growth have increased, the number and impacts of disasters have also increased in Europe in the last two decades, and in the period 1998-2009, disasters caused nearly 100.000 fatalities, affected more than 11 million people and led to economic losses of about EUR 150 billion. Major causes were extreme temperatures, floods, storms and earthquakes [69]. These natural disasters are unfortunately constant over the last years with wildfires being the fifth major natural disaster by occurrence [35].

Floods and storms in Europe accounted for 73% of the total economic damages for the period 1989-2008, being the major threat including heat waves [70], on the other hand, the deadliest disaster in Europe in 2018 was the wildfires in Greece [39].

From 1998 to 2017 climate-related and geophysical disasters killed over one million people and left more than 4 billion in need of emergency assistance. Although most of fatalities were due to geophysical disasters, mainly earthquakes and tsunamis, over 90% of all natural disasters were caused by floods, storms, droughts, heat waves and other extreme weather events. Furthermore, three European countries are among the top 10 countries in terms of absolute economic losses for the period 1998-2017, Germany (floods), Italy (earthquake), and France (storms), respectively. It is interesting that economic losses are significantly bigger in high income countries (65%), while fatalities are higher in countries with lower incomes (46%). For the mentioned period, Europe was significantly more affected by climate-related than geophysical disasters in any manner [71].

About 50% of global losses from natural disasters in 2018 were insured (Europe accounted for 8% of insured losses). Support by the insurance companies helped to increase natural disaster resilience, in other words, the ability to return to previous state as soon as possible. Moreover, developed countries account for the majority of insurance coverage regarding natural disasters. Thus, there has been a continuous growing interest in those countries to have an insurance against natural disasters [39].

3.2 Research instrument

This study is based on the survey conducted by Brown et al. [29] in order to determine disaster resilience in the hotel sector in New Zealand. Similar to the research concepts [29, 58], a few steps were undertaken to increase validity of the research. An extensive literature review and relevant studies were used to develop the survey instrument. The initial questionnaire was tested in a pilot study in December 2018 with ten hotel managers, and European professionals from relevant study area: tourism, insurance, marketing, psychology, security and geography. After receiving useful comments, the questionnaire adapted from [29] was modified; primarily, cultural capital was merged with social capital forming organizational capital. Similar was done by other authors [62, 63]. The question related to the number of years respondents have lived in a particular county was redesigned: I have lived in this country long enough to be familiar with its culture (cultural capital); and the sociodemographic part of the questionnaire was extended. The revised questionnaire was clearer, which improved completion process by reducing possible misunderstanding.

The final version of the questionnaire used in the study consists of two parts. The first part of the questionnaire focuses on 41 capital predictors representing economic (7), organizational (11), human (12), physical (7), and natural (4) capital resources. In this section of the questionnaire, respondents were asked to evaluate the level of agreement with capital predictors on a 5-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree).

The second part includes questions which examine the socio-demographic profile of the respondents (e.g. gender, age, work experience, etc.), hotel profile (e.g. location, category, etc.), as well as respondents’ experience with natural disasters.

3.3 Data collection and procedure

Using the EM-DAT database [35] the authors calculated the top 12 European countries in terms of number of natural disasters (those with over 20 recorded events), for the period 2000-2018 (Table 1). The most frequent recorded disasters include storms, floods, extreme weather conditions (cold or heat waves), ground movements and wildfires, respectively. Following that, two main pathways were used to reach hotel general managers in those countries: directly by the authors, and indirectly through National hotel associations. Both National hotel associations and hotel managers were contacted by email explaining the purpose of the study. National hotel associations were asked to forward the link to an online survey (Google Forms) to their members, or to complete the questionnaire in case of a direct contact with managers. The online survey was conducted from January to March 2019. National hotel associations were contacted in order to speed up the research process. Although this indirect contact was proven helpful, it was a limiting factor in calculating response rate,while the response rate from direct contact with hotels was 68%. A total of 63 surveys were completed and the collected data were processed with statistical software SPSS 23 using t-tests and ANOVA.

3.4 Study sample

The sample consists of 63 hotel managers from 63 hotels located in 12 countries (Figure 1).

Figure 1

Spatial distribution of the study sample – the most affected European countries by natural disasters

Although hospitality industry is a sector being especially significant in the employment of women (up to 53.7% in comparison to the overall economy 46.1%) [72], surprisingly, in the present sample the share of female respondents was 60.3%. The most dominant age group was 36-50. Regarding work experience, those who have worked as a hotel manager from 10 to 15 years (38.1%) are the most numerous. Also, more than 45% of the respondents have more than 15 years of work experience in hospitality, and 76.2% of them have completed education in hospitality sector. Hotel managers from 4* hotels are predominant in the sample. The detailed characteristics of the sample are shown in Table 2.

4.1 Descriptive statistics

Descriptive statistics and Cronbach’s alpha coefficients for all analyzed constructs are presented in Table 3. The reliability analysis confirmed that all measures used in the study are reliable as Cronbach’s alpha (α) ranged from 0.702 to 0.823 [73, 74].

The results reveal that respondents gave the highest marks to Physical capital predictors (M=3.9365; SD=0.97863) and Organizational capital predictors (M=3.8268; SD=0.77530). Similar findings were reported in the research conducted by Brown et al. [29] within the hotel sector in New Zealand. In that study, hotel managers highly ranked evacuation plans, local building codes and backup of all critical organizational data.

Also, many of the organizational capital predictors obtained a relatively high mark which implies that managers are dedicated to the organization they work for, especially to team approach to planning, leadership and problem solving. This is of a great importance for each organization because it is crucial to its success how they perform during crisis caused by external events [75].

Economic capital predictors (M=3.2880; SD=0.72730) received the lowest score among all examined predictors. The major effect on such outcome had a predictor Disaster management expense is significant part of the hotel budget (M=2.6349; SD=1.22213). Despite of having comprehensive multi-hazard insurance coverage (M=4.1111; SD=1.01776), many of the surveyed hotels do not invest significantly in disaster management, i.e. such expenses are just a small share of their budget. One of the primary reasons for this is the financial situation of the organization [60].

These results are not in favor of hotel resilience knowing that the economic opportunities can greatly reduce the negative effect of disasters and make communities more resilient [61]. An additional unfavorable fact regarding hotel resilience is that more than 40% of hotel managers do not know whether any law in their country defines specific requirements or procedures for hotels regarding natural disasters, while one third of them state that such regulations do not exist.

4.2 The independent variables and hotel resilience

T-test for independent samples was applied with the aim to compare arithmetic means of two groups – independent variables (experience with a disaster as hotel manager and general experience with a disaster) and dependent variables (economic, organizational, human, physical and natural capital predictors).

Based on the obtained results, it is concluded that there are statistically significant differences in relation to previous experience with a disaster as hotel manager (Figure 2), with three capital predictors: organizational (p=0.045, t=2.052), human (p=0.006; t=2.842) and physical (p=0.040; t=2.094) and therefore H₁ can be partially accepted. Hotel managers that have previous experience with a natural disaster give higher grades than the others. Similarly, those respondents who generally had experience with a disaster in the past (Figure 3), before they became hotel managers, give significantly higher scores to all five groups of capital predictors (economic capital predictors p=0.013; t=2.557; organizational capital predictors; p=0.017, t=2.457; human capital predictors p=0.001, t=3.157; physical capital predictors p=0.001, t=3.157; natural capital predictors p=0.002, t=3.352), which indicates that H₂ can be accepted. Having experienced manager at top position is very important especially for individual and small hotels knowing that such hotels mainly rely on their own experience in dealing with emergency situations [41]. Additionally, it is worth mentioning that statistically significant differences in responses between managers with different type of experience with natural disaster have not been found in this study.

Figure 2

The relation between previous experience with natural disasters as hotel manager and hotel resilience

Figure 3

The relation between general experience with natural disasters and hotel resilience

Recent studies investigated previous experience in natural disasters and concluded that it represents a factor that highly affects risk perception of such natural events [50]. In line with our findings, some scholars [10, 52, 53] have noted that previous experience positively correlates with disaster risk perception (e.g. people who had such experience are more prepared and can react better in case of new disastrous event), others conclude that people who do not have direct experience of dealing with disasters, usually tend to underestimate them [51] and the seriousness of the situation they create. Similarly, organizations that experienced natural disasters in the past, and learnt the hard way their effects, are more likely to develop this segment of business activity. This includes emergency plans, communication, redistribution of available resources, marketing, etc. [10, 54, 55].

By applying the one-way analysis of variance ANOVA the existence of statistically significant connection between dependant variables (economic, organizational, human, physical and natural capital predictors) and independent variables (managerial experience period, hotel category and organization size) was examined. The relation between organizational age and crisis was explored by a few scholars [56, 57, 58]. However, none of them addressed the relation between managerial experience period and hotel resilience (Figure 4), as explored in this study. As the initial analysis pointed to statistically significant difference in answers regarding human capital predictors (p=0.004; F=5.021) and physical capital predictors (p=0.024; F=3.381) the hypothesis H₃ can be partially accepted. The performed LSD post hoc test clearly revealed that respondents with more than 10 years of managerial experience within hotel industry rewarded those predictors with higher scores, i.e. hotels they work for are more resilient to natural disasters. The significance of managerial experience is crucial in these situations as sometimes organizations rely only on that [41]. Moreover, those with higher resilience tend to be less affected [76] and more able to manage disruptive challenges [77]. This is somehow expected since education and experience positively influence technical, social and conceptual knowledge and skills of managers [78].

Figure 4

The relation between managerial experience period and hotel resilience

The results also greatly differ in relation to hotel category (Figure 5) and hotel (organization) size (Figure 6). Statistically significant difference was noted for the same capital predictors; human capital (p=0.010; F=4.974; p=0.000; F=10.956) and physical capital (p=0.005; F=5.787; p=0.000; F=11.865), which led to partial acceptances of hypotheses H₄ and H₅. Managers of 5* hotels and those who work in large and medium hotels are more oriented towards human and physical capitals. Some studies have provided evidence that supports our findings concerning the link between organization size and hotel category, and crisis planning [56, 58, 59, 60]. Furthermore, Caponigro [60] states that large organizations are in a better position due to their financial profile and it is more probable for them to have an emergency plan in comparison to small organizations which believe that such crisis will not affect them. Although organization size is usually classified according to the number of employees [56], in this study we applied the hotel size classification suggested by Davidson [79] as follows: small (up to 10 rooms), medium (up to 50 rooms), and large (over 50 rooms).

Figure 5

The relation between hotel category and hotel resilience

Figure 6

The relation between organization size and hotel resilience