Fall in customer engagement may put leisure and hospitality reputations at risk

Our survey asked leisure and hospitality business leaders around the world about their approach to reputation risk.

We found that companies are not engaging with customers and stakeholders as much as they should to understand trends in opinion and address any emerging issues that could risk a reputational backlash.

Key findings: companies are engaging less

• Only 10% communicate at least monthly on issues that might affect their reputation, compared to 39% in 2021.
• Fewer business said they knew what their key stakeholders’ issues were (56% compared to 79% two years ago) or what the key hotspots of negative sentiment were (60% vs 79%).
• While 93% of companies rate social media as their most important marketing activity, only 7% of C-suite members communicate on social media at least monthly – down from 43% in 2021.

Anticipating emerging threats

What is being said about your business day to day can seem like background noise. But it can quickly gain traction and develop into adverse publicity and a potential reputational crisis.

In a time when news and opinions travel fast, any negative experiences can quickly spread, go viral, or in the worst cases, even hit the mainstream news. Companies need to be aware of conversations that might turn into adverse publicity, especially in key reputational risk areas for leisure and hospitality, such as:

• Harm to people on the premises
• Allegations of unsafe or unhygienic conditions
• Discriminatory attacks or abuse on customers
• Employee abuse relating to equal opportunities, discrimination, working conditions or safety

A reputational backlash can develop over time. For example, a restaurant chain had received complaints of sexual harassment from employees but the firm was unaware of the scale of the issue or the reputational repercussions until an investigation brought it to public attention.

This kind of event and may be preventable if companies engage regularly and deeply with customers and stakeholders to understand what’s happening on the ground and get ahead of trends in opinion.

Preparing for a crisis

Encouragingly, our survey suggests firms are well prepared to deal with a reputational crisis. All respondents (100%) said they had a reserved budget for a damaging reputational event, up from 87% in our 2021 survey, while 92% said they tested their crisis communication plan every year and 96% said their resilience to reputational damage was either good or every good (88% in 2021).

But crisis management only deals with one end of the reputational cycle, when a sudden and damaging event has occurred. It doesn’t address the other end of the reputational cycle – prevention and mitigation of emerging risks before they escalate.

More work is needed to mitigate risks

The survey shows mixed results when it comes to reputation risk readiness. The level of preparation and financial provision for a crisis event appear to have improved since our last survey.

But the focus on crisis management may be detracting from a deeper understanding of where risks can come from, how to identify them early and prevent them from escalating before they turn into a crisis.

Recommendations: how to get ahead of emerging reputation risks

Engage with customers and stakeholders

By engaging regularly on social media and other channels, you’ll not only get a clearer view understanding of sentiment, you can also build credibility with customers and stakeholders, so you get a fairer hearing if things go wrong.

Build reputation into your business planning

Include reputation on your risk register and carry out regular reputational risk assessments. Make it a senior management responsibility, as part of your ESG agenda and horizon scanning.

Know what people are saying about you

WTW has partnered with Polecat to develop a risk monitoring tool powered by artificial intelligence (AI) that allows you to track live sentiment and get ahead of any brewing story before it hits the headlines.

Measure and prioritise your potential risks

Identify the potential impacts of a reputational event, map any gaps in your mitigation measures, and prioritize the issues of greatest concern. We’ve developed a Reputational Risk Quantification Model that can help.

Learn from your peers and competitors

It’s a good idea to benchmark your business’s resilience to reputational risks. Our Reputational Risk Benchmarking Portal can help you compare your business against the strategies used in 500+ companies worldwide.

Talk to us about your reputation risks

WTW can help you track live sentiment, quantify your risks and compare your preparedness against your peers. We also offer a complete reputation risk management solution, including crisis communication, brand rehabilitation and insurance to protect profits and maintain cash flows during and after an event.

To find out more about our reputational risk solutions, get in touch.