Hotel insurance: Overcoming the unique risk facing hotel chains

As a hotel chain owner, it is likely that you face more risks than single hotels, guesthouses and B&Bs. This is largely due to your increased number of customers and employees – which open you up to risks that other businesses may not face. Read on to discover how cybersecurity attacks, economic downturns and reputational damage can impact your hotel chain, and how to mitigate these risks with the correct insurance.

What risks are hotel chains facing?

Cybersecurity threats

Due to an increased number of customers and employees, your hotel chain will be responsible for a large amount of confidential data. With so much data to keep safe, hotel chains are common targets for cyber criminals. From phishing attempts to ransomware threats to point of sale attacks, there are a wide range of methods that cybercriminals may use to access your hotel data. And with so many points of entry to protect, it is important in insurance for hotels.

Economic downturn

Recent economic forces such as the cost of living crisis have had a huge impact on hotel bookings. In fact, just last year, hotels reported that their operating costs had increased by 55.2%, which is the highest they have been since 2007. In addition to this, many customers are currently watching their spending, resulting in fewer reservations. If the cost of living crisis continues for much longer, it could have a major impact on hotel chains, which means you could see an increase in your number of empty rooms.

Unexpected accidents

Accidents can occur at any time, particularly across a large number of hotel locations. Whether an employee slips on a wet floor or a customer trips on a loose carpet edge, there are a variety of ways that people can hurt themselves whilst working or staying at one of your hotels. Whilst you can put steps in place to try and avoid these accidents, it is recommended to have insurance coverage for these unexpected situations.

What impact can these risks have on reputation?

If a customer, in particular, suffers an injury or damage within your hotel chain, this could seriously impact your reputation. It is incredibly important to ensure your hotels have a sound reputation or you could see a direct impact on hotel bookings in the future, and risk the growth of the business. Unlike a single hotel or B&B, one high-profile mistake can lead to millions of pounds of losses with a negative reputation that can take years to repair. There are a number of scenarios that can impact the reputation of a hotel chain with the worst case scenario being harm coming to a guest or their property, along with employee discrimination complaints and unsafe or unhygienic conditions. These key reputation risks you may face in the hospitality industry reinforce how crucial it is to get the correct insurance for your hotel chain.

What hotel insurance do you need?

Now we have covered the risks facing hotel chains, let’s take a look at the types of insurance you can have in place to give you peace of mind and hopefully save you some money later down the line.

Public liability insurance

One of the worst-case scenarios for a hotelier is to find out that a guest has been injured on your premises. Not only can guest accidents lead to a negative hotel chain reputation, but it can also be extremely costly financially. An accident can be something as simple as a guest slipping on a wet floor but if they can prove you were at fault, you are liable to pay them. For this reason, it is crucial for hotels to have public liability insurance that can protect the business. This insurance will cover legal fees and compensation costs, as well as any losses or damage to their property. Unlike single hotels, guesthouses and B&Bs, hotel chains can see thousands of people per day, making it more likely that there will be a guest incident.

Employer’s liability insurance

Like public liability insurance, employers liability insurance is a legal requirement for hotels and it is to protect against costly legal fees resulting from claims made by your hotel chain employees. Claims could arise from accidents or injuries in the workplace, such as getting burnt in the kitchen. These types of insurance policies are particularly valuable for protecting against reputational damage too. Ensuring that staff are fully trained and aware of health and safety plans is an additional way to try to avoid these claims.

Cyber liability insurance

Cyber liability insurance covers incurring costs as a result of a cyber attack. If the attacker accesses, leaks or steals your customers’ personal information, your hotel chain could face claims from a large number of customers. This could be extremely damaging for your hotel chain, both financially and reputationally.

Business interruption cover

Business interruption cover can help your hotel chain compensate for lost income that may occur as a result of issues, such as flooding or fires – anything that means you have to close part of or all of your hotel. Closing any of your business will result in decreased revenue, which could leave you struggling to pay your staff. Having business interruption cover will make sure wages and missed income are dealt with, giving you one less thing to worry about when managing a hotel chain. Please note that following the pandemic, most policies exclude or restrict cover for communicable diseases.