How your leisure and hospitality business can prepare for the next decade and beyond by exploring emerging trends and establishing a collaborative risk culture.

Preparing and testing future scenarios allows your leisure and hospitality organisation to respond more effectively to greater uncertainty into the next 10–20 years.

In 2023, we shared our WTW Leisure and Hospitality Futures Report, commissioned to understand the risks, mega trends and strategic issues likely to affect trading for the leisure and hospitality (L&H) sector over the next 10 years.

WTW partnered with Mack Institute's Collaborative Innovation Program (CIP) at the Wharton School, University of Pennsylvania, and forward thinking inc. to analyse the dramatically changing conditions and the equally profound responses of the sector to emerging trends.

Successfully exploring these emerging risks and developing your organisation's response can give key teams the 'muscle memory' of working together to address new, complex and inter-related risks. By deploying narrative 'storylines' that weave together risks and trends, you can connect risks and opportunities you might otherwise have considered in isolation.

This process of developing nuanced storylines and scenarios is about identifying who should be involved in your response and the breadth of capabilities you can bring to interrogate and effectively respond to complex risks. This process can take time and needs to be nurtured and constantly refreshed to be effective. But the potential rewards, in terms of enduring resilience and competitive advantage, should outweigh this time investment.

So your leisure and hospitality can outsmart the uncertainties of the next year, next decade and beyond, this insight offers a headline framework for more effective scenario planning.

Five key steps to more impactful scenario testing

01
Reconsider your existing list of scenarios.

Do you test combinations? What risks have emerged already and what ones should you test, both in isolation and in combination?

02
Identify the gaps in your planning.

Do you have disaster recovery and risk management plans that are fit-for-purpose in a polycrises (where more than one event happens simultaneously)?

03
Quantify your financial pinch points.

How liquid is your business and what would a sharp shock do to your financial gearing? Has your business model changed recently? Can you put numbers against the point where your financial resilience would be under pressure?

04
Understand your business resilience.

What are your core objectives and what is stopping you from achieving them? How are you quantifying and monitoring resilience?

05
Interrogate potential for reputational damage.

What could drive this damage and how could that impact revenues? What might you do to mitigate this?

Once you delve into these questions, you can start to build-out broader scenario sets and understand the potential impact of these scenarios. You can then work with internal or external insurance and risk experts to explore your options for mitigating, reducing or transferring risk.

Actions to address the impact of more nuanced scenarios that connect risk areas include:

  • Developing business continuity plans to identify weaknesses or pinch points and explore the operational action you can take to address them
  • Ensuring your supply chain resilience is a board agenda item and increasing cross-functional collaboration to resolve problems, working more closely with suppliers and dependencies
  • Continuing to enhance scenario planning, working with subject matter experts acting as 'devils advocates' across risk, people, climate, emerging risks and considering the potential economic situation in 10 years' time, challenging your business response to ultimately generate action plans for leadership
  • Quantify risk interconnectivity with data, modelling the aggregated impact of a given risk triggering another, then another. Once you have identified and quantified this interconnectivity, you can begin to build the right risk management and insurance program able to protect the business and reveal the opportunities.

Getting your preparation and testing of scenario mapped out allows you to switch from a 'prepare for one' approach to 'prepare for all' stance. This will give you the agility and collective memory that allows you to activate a robust framework as new risk impacts emerge. It's this discipline and collaboration that could characterise the most successful leisure and hospitality businesses into their enduring future.

For a smarter way to navigate the emerging and increasingly inter-related risks impacting the leisure and hospitality sector, get in touch.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.