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.
Even with the insurance piece of the puzzle solved, there was still more work to do for hotels in pre-season hurricane preparation. This included producing manuals with checklists. Employees were trained and then assigned tasks, such as securing loose outdoor objects, assisting guests with transportation arrangements and cancelling reservations. The manuals included a checklist of needed supplies, including one gallon of water per person, per day, for both drinking and hygienic purposes, ready-to-eat foods and medications. Also established in advance were protocols to make tough decisions well before a storm ever hit about policies that can be relaxed in an emergency – accommodations for pets and lowering rates for evacuees and seniors, for example.
An updated contact list of every hotel worker and an emergency contact for each person were essential parts of the hotel storm manuals. Hotel operators also did things like put together “go bags” for guests that included first-aid kits, medications, flashlights, batteries and chargers. Finally, hotel operators in the path of those storms took care to make sure employees had plans for their families and access to safe shelter when not at work.
Once the season hit, what happened?
Hurricane season normally starts in June – although it seems to be extending on both the front and back ends – and that’s when planning turns to action. Hotels that employed industry best practices had employees tasked with monitoring weather reports daily from multiple sources like radio, TV, the Internet and breaking news alerts from services like Weather.com. Hoteliers informed guests during check-in about the property’s hurricane plans and protocols and issued hand-outs and distributed in-room informational materials.
Once warnings and watches went into effect – 36 and 48 hours ahead of the storms – operators used public address systems and pagers to alert staff and guests about the situation. Many hotels encouraged early evacuations by knocking on doors, leaving notes and broadcasting messages over the internal TV system. When it became clear a major storm or hurricane was on the way, hotels kept future guests out of harm’s way by canceling reservations 48 hours in advance. For guests already on site, hotels worked with other hotels and shelters to find accommodations in safer areas. Hotels also were prepared with established relationships with taxi, limousine and rental car services to provide transportation options to their guests.
The 2017 hurricane season was so intense that many hotels were left with no choice but to initiate evacuation plans to get guests to safer ground. Millions of people in Florida, Georgia and South Carolina were under evacuation orders ahead of Irma, for example. Hotels often had several hours’ notice to complete their plans that involved alerting guests, securing the grounds, acting on the sheltering and transportation arrangements and telling non-essential employees to go home. Some employees were tasked with making sure critical business and records systems were protected. And some hotels used evacuation periods to build good will with customers and area residents. The Hyatt Regency Orlando took in nearly 900 dogs and cats during Hurricane Irma as evacuees had to leave for other parts of the state.
In some instances, hotels were faced with the difficult situation of a guest’s refusal to leave. Hotel personnel had to make those stragglers aware that once a mandatory evacuation order is given, emergency responders would not be able to assist them once the storm closed in.
Finally, evacuations meant hotels had to have plans in place to decide whether they’d issue refunds or credits for room nights not used. Some hotels had nonrefundable advanced booking prepayments and preferred to offer a future stay in lieu of a cash refund.
After the storm – getting back to business
Once the hurricanes passed, hotel operators immediately got to work to assess damages. Many of the first calls they placed were to insurance agents for guidance and help with the next steps, including taking photos of damaged property and working with approved vendors and suppliers on repair work. It took some properties months to repair damages from the storm. One resort in Islamorada, Florida claimed a total loss on its pool and other destruction that resulted in half a million dollars in damage.
Once the damages were assessed through work with adjusters, operators stayed busy doing as many temporary repairs as they could and made arrangements for cleanup work and longer-term fixes. After the work was finished, they asked staff to report back to work and arranged for needed supplies. Hotels had to then ramp up their communications, public relations and marketing plans to bring business back through the front door.
Many properties were able to survive the financial impacts of the storms because of business interruption coverage that may cover some of the loss of income due to a natural disaster. It is one aspect of the various types of claims those operating in the hospitality industry must consider in the wake of a storm, earthquake, fire or other peril, including: direct physical damage, contingent business interruption, loss of attraction, ingress and egress, loss of power, political acts, and dependent properties.
What we learned
Not even an expert can imagine all of the scenarios that lead to a hotel losing revenue. But a specialty hotel insurer can help operators find the right policies for them before a disaster like a hurricane strikes, and then walk them through the claims process if a catastrophe does present itself. The historic hurricane season didn’t bring uniform problems to the industry – some hotels, in fact, didn’t shut down at all. But for those that had to replace pools, windows and roofs or those that had to suffer months of revenue losses because they couldn’t sufficiently accommodate guests, having a hotel-specific insurance plan in place surely made the recovery process run much more smoothly.
HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.