The Hotel Spa: Evolving Risks and Coverage Needs

By Fran Sarmiento Executive Vice President, Venture Insurance Programs | January 13, 2013

Hotel spas are a luxurious feature that enhances the quality of a stay, brings guests back time and time again, and adds a terrific source of revenue to your hotel. These spas have grown from the "nail salons" of the eighties to the "Medi-Spa" of today, offering everything from specialized cosmetic services to invasive medical procedures once done only in hospitals or doctors' offices.

With this growth and change have come new risks and exposures. Today's hotel must not only have adequate insurance for their spa, but also a risk management program to reduce or eliminate potential risks-from the smallest slip and fall to a catastrophic medical malpractice claim.

From an insurance perspective, you can break spa services into two separate categories: those that provide cosmetic services only and those that also provide medical services. Cosmetic services range from facials and manicures to hair and makeup. Medical services, on the other hand, involve more invasive procedures such as Botox injections, laser hair removal, filler injections, laser skin rejuvenation and acupuncture to name a few.

Let's first examine the professional liability needs of these medical services and then look at the property and liability concerns of general spa operations, including issues to consider when subcontracting your spa operations.

Medical Services Risks

Understanding whether services are considered "medical" or not can greatly assist you in protecting your spa. Talk to your insurance partners to define your services. If a spa provides medical services, you must have professional liability insurance coverage to protect your hotel from medical malpractice claims. Specifically, be aware of whether you employ "incidental professionals" or "health care or medical professionals." Most technicians in a spa are considered "incidental," which means that they provide noninvasive, cosmetic services. But once you hire those who provide "invasive techniques or injections," you start to cross the line for your insurance coverage needs.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.