Risky Business: New Amenities Bump Revenue - and Claims

By Fran Sarmiento Executive Vice President, Venture Insurance Programs | July 28, 2013

With strong growth continuing and more revenue at their disposal, U.S. hotels are looking for new ways to attract guests. That often means adding or enhancing amenities, which today means much more than an ice machine and fitness center. From water parks and rooftop nightclubs to the concierge turned tour guide, hotels are looking to differentiate themselves.

As you start dreaming of the next renovation or service, you should also heed a word of caution: Unique amenities hold the potential to differentiate your hotel, but what sets you apart can also increase your risk and your insurance claims.

Does this mean you should stop dreaming? Not at all: you can add amenities that are lucrative, unique and safe, as long as you understand and prepare for their inherent risks with a strong risk management and safety program, as well as adequate insurance.

Waivers and Risk Transfer

Before examining some of the most popular amenities at hotels today, it's important to look at some risk management and insurance tools that apply to almost any amenity or service, whether you are adding a water park or just renting skis.

One important tool is the waiver. When guests sign these documents, they agree the hotel is not responsible for accidents, injuries and other harm to them or their possessions. While no waiver can eliminate a hotel's liability, especially if you are negligent, these documents can help minimize your financial responsibility when a claim is filed.

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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.