Black Swan Theory of Events and the Impact to Hospitality Operators: Literature Review and Proposed Analysis

Abstract

The Black Swan theory of events is an incident that deviates beyond what is normally expected of a situation and is extremely difficult to predict (Talib, 2007). Black Swan events impact the hospitality industry in many ways. Weather, widespread illness, civil unrest, terrorism, and loss of utilities are out of the immediate control of the industry’s participants but impact their results. Occurrences at the property/corporate level can also impact performance in ways such as: food contaminants impacting restaurants, cruise ships losing power, running a ground, or sinking, experiencing a widespread Nora virus, hotels face fires, strikes, data breaches, boycotts, as well as events such as amusement parks having ride fatalities and animal welfare protests, etc. All of these events are quickly spread by multiple news sources, and consumers are able to search quickly using Google or other search engines to get more details.Previous studies have looked at the aftereffects of exogenous—or self-inflicted— events, and how management teams reacted or did not react and the impact to operating results (Kosova & Enz, 2012). However, there is a paucity of academic analysis of Black Swan events to determine whether there is a way to reduce the impact.