Business Continuity Basics

By Marc Glasser Managing Director, RM LLC | January 27, 2013

This article addresses business continuity basics. Business continuity management is complex and generally industry and even site-specific. In the hotel industry, the overall mission and function of a hotel and/or hotel company is generally consistent. It provides for-profit lodging accommodations and associated services. While there is a significant "range" of hotel venues and services from luxury high-end to budget conscious consumer markets, the overall mission remains the same. In terms of business continuity, independent of hotel "range", alike or not, each specific hotel venue will have its own unique business continuity management program, whose program's objectives and outcomes are generated by a business continuity assessment and corresponding Business Impact Analysis, adequate senior management support and program asset allocation, professional business continuity plan development, implementation and ongoing management.

Business continuity program encompasses all aspects of an organization's business continuity. A business continuity plan is a component of the business continuity program. A business continuity plan documents continuity and recovery procedures to be implemented during and after disruptive conditions. The hotel's business continuity plan addresses venue specific continuity and recovery procedures actions supported by appropriate training, plan testing (or actual plan implementation during times of likely or actual disruption) and modifying the business continuity program and plan based on "lessons learned". This article is not intended to qualify one to implement a business continuity management plan but rather to touch upon business continuity basics, raise awareness of the importance of a business continuity plan, and further qualify one to facilitate others initiating or reevaluating one's hotel specific business continuity plan.

Fundamentally, effective business continuity is the ability to function by providing essential services under disruptive conditions. Business continuity management is the process that focuses on developing, implementing and maintaining organizational capabilities, before, during and after a possible disruption. Disruption can be generally classified as natural, technical and human induced.

Natural disasters include flooding, hurricanes, tornadoes, tsunamis, weather extremes or unusual weather events (unusual in the sense that the location is unprepared for the generally "rare" weather event). The aforementioned "rapid onset" weather disasters come to mind, generally less often than "slow onset disasters" such as prolonged drought conditions. Technical disaster events include data, utility (e.g. power, water, Internet provider) or critical supply chain component disruption or unavailability as well as hazardous material incidents. Human induced disasters include terrorism, civil unrest, sabotage, vandalism, arson. Human induced disasters can be intentional ("on purpose" such as internal/employee induced disaster) or accidental (human error or oversight).

Disruptive conditions can have a catastrophic business continuity (and otherwise) "cascading effect". The following, while not hotel specific, is an appropriate, although unfortunate, "cascading effect" catastrophic example. The March 2011 Japanese Fukushima Daiichi catastrophe was result of an earthquake, tsunami and nuclear disaster. Concisely stated, the Fukushima Daiichi catastrophe was result of the cascading effects of a 9.0 magnitude earthquake induced tsunami causing shutdown of active reactors at the Fukushima nuclear power plant. The earthquake induced tsunami struck the power plant disabling backup diesel generators required to cool the reactors. The lack of cooling led to explosions and Fukushima reactor meltdowns. Additionally, radioactive emissions hampered response and recovery activities.

According to a report from the National Police Agency in Japan, the total casualties consisted of over 15,000 deaths, over six thousand injured, in excess of 125,000 buildings completely collapsed, and over 900,000 buildings partially collapsed. Additionally, roads, dams, and railroads were damaged and fires broke out in many areas. As a result of the cascading event induced disaster, millions of Japanese lost power and water. According to The World Bank's estimation of the economic cost, this was the most expensive natural disaster to date, costing over $200 billion. This tragic disaster, where effects could have been prevented or mitigated with appropriate allocation of resources and senior management buy-in, quantifiably illustrates loss of: life; assets and services as well as personal injury. Prevention could have been facilitated by identifying likely threats (including cascading effects) and, based on an effective risk assessment, the facility could have been built elsewhere. Mitigation could have been enhanced with initial project construction including additional backup generators elevated above sea level, located further inland and appropriately housed.

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.