Is Your Hotel or Restaurant Insurance Adequate? Twelve Tips to Get the Right Coverage & Reduce Risk

By Richard Dahm Senior Risk Consultant, National Hospitality Division, Wells Fargo Insurance Services | February 15, 2010

In the last several years, the dramatic rise of insurance costs has placed an excessive burden on hotel and restaurant owners. Fortunately, the forecast for the 2007 insurance market remains optimistic with more insurance companies willing to compete and many offering broader coverage terms. As new markets become available, industry analysts advise caution. They recommend hotel and restaurant owners re-examine their existing management programs and develop initiatives to reduce the overall cost of risk. The following outlines a series of twelve tips to help you re-examine your insurance program, its depth of coverage, and related risks.

Twelve Initiatives for Hotel & Restaurant Management:

1 - Find the Right Insurance Specialist

Today, most hospitality executives realize that it is essential to find an insurance broker that specializes in their industry, one who knows the market and can tailor a reliable insurance program to their needs. A talented broker specialist can identify the right insurance coverage to solve immediate risk issues and anticipate future complications, thus allowing owners to concentrate on what they do best -- managing and developing their business. In fact, several of the larger insurance brokerages offer an entire hospitality division with a full staff of risk management professionals and specialty services including loss trending analysis, safety engineering, worker's compensation claims management, and experience modification analysis.

2 - Insurance Company & Underwriter Expectations

Insurance companies generally want the same type of information about your business regardless of the type of establishment you own. Financial information is necessary, especially sales receipts showing the percentage of alcohol to food sales. In addition, it is helpful that an owner or corporation have a resume highlighting their prior successes in the industry. - -

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.