Liquor Liability: How to Reduce Your Risk

By Christopher Bolger Senior Risk Manager, Venture Insurance Programs | January 11, 2015

Serving liquor is risky business. According to the Centers for Disease Control and Prevention (CDC), there were 88,000 alcohol-related deaths each year from 2006 to 2010, and MADD reports 28 people die each day as a result of drunk driving accidents. Like all businesses that serve alcohol, the hospitality industry must be concerned about these trends and their liquor liability exposure.

So, what does a hotel do in the face of such alarming statistics? As individuals, we weigh the risks and benefits of alcohol use, and businesses must do the same for alcohol-related amenities. Guests are unlikely to do without the hotel bar, the in-room mini bar or open bars at wedding receptions. But with training for your staff, clear protocols and a few key business decisions, you can reduce the potential for alcohol-related incidents and claims, in turn protecting guests, staff and your business.

How Hotels Are Liable for Alcohol Consumption

Hotel liquor liability claims stem from the kind of incidents and accidents one would expect after a night of indulging. After one too many, an intoxicated person falls from their chair at the bar, or a wedding reveler trips on the dance floor. Perhaps a guest drinks at the hotel bar, picks up his car from the valet, drives under the influence, gets in a car accident and injures or kills himself or other people. As an insurance professional, I have even seen workers' compensation claims due to hotel employees' drinking at a staff holiday party.

In instances such as these, hotels are held responsible even if they were not at fault. A guest need only claim they saw a wet spot on the floor, or that the bartender knowingly over-served them. Liability can be computed on the hotel, which is held responsible for the injured party's medical bills, lost time from work and other associated costs. In the case of older adults, medical costs can be quite high due to complications.

It may seem unfair that hotels are held responsible in cases such as these, but it is the law. "Dram shop" is a term for laws which govern the liability of businesses that serve alcohol to intoxicated or underage people who harm themselves or others. Depending on the state in which it is located, a hotel may be held responsible for serving liquor to minors, visibly intoxicated adults and those who later drive drunk, as well as any third parties injured through alcohol-induced accidents. Keeping current with the state statutory dram shop requirements and exposures is crucial, allowing hotel owners to incorporate them into internal policies and procedures.

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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.