The 2017 Hurricane Season That Was: What We Learned

By John Welty Practice Leader, SUITELIFE, Venture Insurance Programs | June 24, 2018

Seventeen named storms, 10 hurricanes, and six Category 3 or stronger hurricanes swept through the Atlantic Basin in 2017, well above the 30-year average of 12 storms, six hurricanes and two major hurricanes, Weather Channel data show. This placed 2017 among the top 10 most active Atlantic hurricane seasons on record, according to Dr. Phil Klotzbach, tropical scientist at Colorado State University.

Three devastating hurricanes – Harvey, Irma and Maria – hit Texas, Florida, Puerto Rico and the surrounding Caribbean so hard that the impact of the storms is expected to be felt for many years to come. Harvey, alone, dumped 50 inches of water along the eastern coast of Texas and brought the region to a complete standstill along with catastrophic losses worth $75 billion. Tourist haven the Florida Keys took a direct hit from Irma, a storm so strong that at least 25 percent of the homes there were destroyed. Its losses could reach $83 billion. Maria, meanwhile, was the strongest hurricane to hit Puerto Rico in 85 years. Dubbed a $95 billion storm, it resulted in hundreds of deaths and devastated the island's already fragile economy.

Hotels in the eye of all three of those hurricanes (and other storms) are back in business thanks to the savvy response by hoteliers and, in part, to insurance coverage secured well before the tempests ever hit. Hotels, though, weren't affected equally. Some never closed at all while others took months to deal with damages that rendered them inoperable. It's one thing for a hotel to reopen after calling in a crew do deal with a felled palm tree. It's a whole other matter when a roof is ripped away, nearby roads and bridges are ruined or in-house technical and operations systems have been destroyed.

Preparing to make the best of a bad situation

For the most part, the hotel industry was ready for the storms. Many of them, thanks to years of planning and an understanding of what each hurricane season may bring, were poised to put their emergency efforts into action days before the storms made landfall. They took proactive measures like procuring extra food, bringing in more generators and even having employees set up rooms in their homes for evacuees who couldn't find a spot at hotels or shelters.

The bulk of hotel properties in hurricane zones know the importance of establishing a successful working relationship with a trusted insurance partner to understand the best lines of coverage, not only to help keep the business up and running but to recover from property damages. The hotels that fared the best after the 2017 hurricanes understood their policies, coverages and deductibles before the storms ever made landfall. Their insurance agent was just a call away when the recovery work had to begin. Yet experts say there still are too many hotels that are unaware of what their policies cover or even exclude. Some specialty hotel insurers are able to hone in on the unique needs of a lodging business to offer solutions such as an all-lines insurance and risk management program for independent and boutique properties with added catastrophic capacity.

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Coming up in October 2018...

Revenue Management: Getting it Right

Revenue Management has evolved into an indispensable area of hotel operations, chiefly responsible for setting forecasting and pricing strategies. Because the profession is relatively new to the hotel and hospitality industries, a clear-cut definition of what exactly Hotel Revenue Management is has only recently emerged - Selling the Right Room to the Right Client at the Right Moment at the Right Price on the Right Distribution Channel with the best commission efficiency. Though the profession can be summed up in a single sentence, that doesn't mean it's easy. In fact, it's an incredibly complicated and complex endeavor, relying on mountains of data from a wide range of sources that must be analyzed and interpreted in order to formulate concrete pricing strategies. To accomplish this, Revenue Managers rely on an array of sophisticated technology systems and software tools that generate a multitude of reports that are central to effective decision-making. As valuable as these current technology systems are, much of the information that's collected is based on past historical trends and performance. What's new is the coming of big, data-driven, predictive software and analytics, which is likely to be a game-changer for Revenue Managers. The software has the capacity to analyze all the relevant data and predict occupancy levels and room rates, maximizing hotel profitability in the process. Another new trend that some larger hotel chains are embracing is an emphasis on Booking Direct. For Revenue Managers, this is another new channel with its own sales and costs that have to be figured into the mix. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.