By Jeff Duncan, EVP and Head of Commercial Lines at AmTrust Financial

There’s no denying that the COVID-19 pandemic greatly affected the hospitality industry, especially hotels and travel. Many hotels are still recovering from two years of reduced occupancy and revenue. In fact, AmTrust’s hotel clients saw a revenue drop of 25-50% during the worst of the pandemic, with some down as much as 70%.

The good news is that the industry is beginning to rebound, with increases in both business and leisure travel so far in 2022. However, business-focused hotel properties are likely still struggling. Working remotely has grown in popularity, and many companies have no plans to require employees to return to the office full time. Instead, businesses have discovered expense savings from reduced travel, and with the broad success of virtual meetings, business travel is unlikely to return to pre-pandemic levels for the foreseeable future.

The travel industry has evolved since the pandemic. Both leisure and business hotel guests now have different expectations when they travel. They expect personalization, opportunities for wellness and self-care, technological advances like mobile check-ins and contactless payments, sustainability, eco-friendly construction and more. They also have many options to be vocal about their overall experiences, both good and bad, from posting images on social media to sharing online reviews. One low-rated experience can lead to multiple lost guests.

 The Impact of COVID-19 on the Hotel Industry: What Risks do Hotels Face?

Many hotels remained empty throughout the early months of the COVID-19 pandemic. Today, COVID-19 continues to influence daily life across the globe and most likely will have an ongoing impact even as economies reopen. However, the American Hotel and Lodging Association (AHLA) reports that room revenues are projected to reach $168 billion in 2022, an increase of 19% compared to 2021. While that’s promising, the AHLA also predicts that only a little over half the meetings and events will return in 2022, so pre-pandemic spending on things like food and beverage, meeting space and other services will continue to lag.

The pandemic affected the hotel industry in other ways, too, including risks that could lead to an increase in exposure claims. Some properties changed their core operations during the pandemic, housing discharged COVID-19 patients who couldn’t find space in post-acute care facilities. Others contracted with government entities and non-profit organizations to provide housing for people who needed help. Both of those efforts are commendable, but they fundamentally changed the risk of insuring a hotel in ways that all carriers struggled to account for.

Regularly-scheduled maintenance was understandably deferred at many operations over the last two years. Some operators even shut down some major systems entirely. So, while the volume of typical liability and property claims dropped with reduced occupancy, they were replaced with water damage from pipes freezing, or damage from leaking roofs and undetected fires. The net effect on loss costs was probably worse than normal.

 Hotel Safety Tips to Reduce Claims Post COVID-19

When it comes to maintenance, what’s good for your underwriter is also good for your business. Hotel operators must ensure they’re addressing maintenance needs thoroughly not only to manage insurance risk but also to create excellent guest experiences that keep them returning to the property. It is also vital to keep employee safety top of mind. Hotel employees face a variety of workplace hazards, including:

  • Ergonomic injuries: Repetitive motions from cleaning and wiping surfaces with the same arm or hand can lead to carpal tunnel and other musculoskeletal injuries.
  • Slips and falls: Cleaning bathroom or shower floors can lead to slick surfaces and pose slip and fall risks.
  • Strains and sprains: Injury can occur when pushing heavy carts full of supplies, lifting mattresses, vacuuming, bending and stretching to reach surfaces while cleaning.
  • Chemical exposures: Using cleaning agents with chemicals and cause long-term respiratory issues.
  • Volatile guests: Hotel employees, from housekeepers and maintenance workers to the front desk staff, can be more at risk of facing violent scenarios or harassment from guests, especially when working alone.

Here are a few things hotel operators can do to ensure a safe, healthy environment for workers and a great experience for guests:

 Perform Regular or Necessary Maintenance Tasks

Extended disuse and reduced maintenance at some properties are changing the risk profile and increasing both attritional and serious property and liability losses. Hotel operators need to address maintenance tasks thoroughly before reopening and keep up with these tasks. A soggy carpet from a ceiling leak, a grimy hot tub or pool, or a dirty water feature in the lobby will result in a terrible guest experience – and, most likely, bad PR for the hotel.

Keep Lines of Communication Open

Communication is key at all levels of the operation for both employee safety and reducing claims. Housekeeping staff should let colleagues and managers know their location at all times in case of an emergency like an injury or an altercation with a guest. Regular meetings should be held where staff has the opportunity to voice their concerns over any tasks or procedures that have made them feel unsafe. Likewise, insurance carriers need to act when risk is changing in real-time, and underwriters should provide agents with a clear explanation of any concerns.

 Train All Staff on Safety Procedures and Policies

The AHLA has updated cleaning and safety guidelines in response to COVID-19 that all hotel employees should be aware of and follow. Additionally, hotel operators should host training sessions on safety procedures on a regular basis. These sessions need not focus exclusively on safety – they can reinforce a property’s guest experience standards, update staff on changes to dining and other services, and also address topics like preventing muscle injuries and dealing with workplace harassment and violence.