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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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.