Top 5 risks for your hotel… and how to prevent them

NDML: Protecting Against Risk

Hotels are great venues for customers to escape from the stresses of daily life, relax and enjoy a break away. They expect their stay to be hassle free, and to enjoy a safe night’s sleep with no disturbances.

To achieve this requires expert sleight of hand. Hotels work tirelessly to make sure all the hard work goes on behind-the-scenes to ensure a calm, collected and completely confident customer-facing veneer.

So what risks do hotels face and what must operators do to ensure customers never feel the impact?

What are the Top 5 risks facing hotels?:

Updated as of November 2022

1. The Cost of Living Crisis

The affect of the cost of living crisis on consumer spending cannot be underestimated. International travel is already down, and card spending for holidays is down 1.9 percent month-per-month as spend on fuel and household bills increases.

The hotel sector does rely upon the tourism industry, and so the fall in the pound can sometimes help more than hinder hospitality. Americans visitors seem to have increased, however staycations seem to be at an all time low, with 90% of the British public concerned about an impact to their finances. Where your hotel is based could affect how badly a lack of British customers impacts your profits – be it a decline in diners, drinkers, or night guests.

35% of respondents to a quarterly hospitality industry survey said they expected to be operating at a loss or to be unable to continue trading by the end of the year. Many pubs and hotels will close for the winter because of high costs. “Oil, potatoes, tomatoes, chicken, it all just jumped,” reports a local landlord on the Ukraine crisis; hotels are struggling to maintain their profit margins without passing costs onto customers.

The only solution is effective cost management; assessing your spend in order to cut unnecessary costs and stay price competitive.

2. Hotel Energy Bills

On the morning of 8th September, Nick Abraham, Royal George pub and guest-house owner from Yorkshire, received a call from his mate to let him know a group of men had been sighted breaking into his pub. The men told Nick they were there on behalf of E.ON and had been sent to remove his gas meter, effectively stopping the supply. This story is one of many, and, as of the time of writing, the Royal George is closed; highlighting predictions that more than a third of UK hospitality firms could go bust by next year.

In partnership with NDML, the NTIA have provided guidance on saving money on utility bills. Energy saving tips include:

  • Don’t light or heat empty space.
  • Watch what your staff are switching on and when and for how long?
  • Add motion detectors
  • Invest in LEDs
  • Check cellar temperature – Remove items that generate heat
  • Keep fridges clean and away form walls with poor air circulation
  • Clean extractor hoods
  • Ensure equipment is turned off rather than on standby
  • Buy energy contracts in bulk

Writing an energy management plan is necessary to help ration energy usage.  For help with energy management planning, contact your energy partners, and your broker.

Contact NDML

3. Hygiene to prevent Coronavirus and Flu

Of course, the pandemic altered the interests of nation and now everybody is much more aware when it comes to sanitation and hygiene. The government’s advice evolves constantly, so hotel managers and business owners must keep up to date with local advice and information.

Key principles include:

  • Increase cleaning regimes
  • Make sure hand sanitiser is readily available in all communal areas throughout your establishment
  • Assess your hotel’s signage and implement new floor markings and other indicators if necessary
  • Assess the layout of your hotel and communal areas, implementing new queuing systems or one-way paths if necessary to ensure social distancing can be achieved
  • Maintain use of screens or barriers in communal areas or bars
  • Provide staff PPE if required, offering advice and guidance on when and where it’s necessary
  • Conduct risk assessments for every aspect of your hotel (including bar areas, restaurants and food prep if applicable). Keep these up to date
  • Ensure all staff understand the symptoms of COVID-19, when to self-isolate and what they need to do next
  • Have a plan in place for if a guest falls ill

Communicate your plan to customers. Make sure your disease and hygiene measures are stated on your websites. Customers are more likely to book with you if you can prove you’re doing everything you can to keep guests and staff safe.

4. Cyber Security

You must do everything you can to avoid a data security breach. Hotels store information about their guests, including sensitive and financial data. It’s important malicious attempts to obtain this data won’t be successful.

Attempts to steal credit card information, or social engineering attacks like phishing / vishing (malicious emails and phone calls) are on the rise.  

Make sure your hotel has conducted a cyber security assessment and put measures in place to keep your customer’s data safe.

  • Keep all WiFi networks safe and secure, with a strong password in place
  • Invest in Antivirus and Anti-malware software to protect your systems from attacks
  • Be compliant with the Payment Card Industry Data Security Standard
  • Train employees to be vigilant. They should know not to click on suspect links or open attachments from unverified sources

We can’t all be cyber security experts, but you can call upon people who are. Ask a professional to assess your hotel and provide recommendations. Remember that the world of technology changes rapidly, so you’ll need to keep your security measures updated and implement new systems as the risks change.

5. Unexpected incidents

Fires, floods and other natural disasters are unlikely to happen. But, if they do, the impact could be catastrophic. There are some key ways to minimise the impact of a crisis:

  • Train staff to handle disasters and unexpected incidents effectively
  • Have a Business Continuity Plan in place
  • Install early-detection equipment for fires and have high quality security equipment in place
  • Examine your risks, and put mitigation measures in place (such as flood and fire doors)
  • Improve ventilation systems within your venue
  • Check your insurance policy to make sure you’re covered for such eventualities

Then there are awful incidents such as terror attacks to contend with. Again, terrorism is not likely to impact your hotel. But it does present a major risk and hotels are more likely than other businesses to be targeted. That’s because hotels have many people on-site. Hotels are open to the public so they may potentially be considered an easier target. There’s not a lot you can do to prevent terror attacks, aside from being vigilant and training your staff. The best thing you can do is make sure you have the right insurance cover in place to protect your business. That way, if the worst does happen, you’ll be in a good position to bounce back.

And a bonus tip, don’t forget your Guests

You may have every risk management protocol in place, but that won’t stop guest behaviour causing potential problems. While the customer is always right, it’s possible a guest may get injured or damage one of your rooms accidentally. You can’t eliminate all risk, but you must be able to demonstrate you’ve done all you can to keep guests safe. Make sure risk assessments are kept up to date and train your team to look out for and correct potential hazards. If a slip, trip or fall can be avoided, then it should be. Look out for spillages, loose carpet or other problems that could injure a guest.

Comprehensive hotel insurance will give you peace of mind that, if the unexpected does happen, you’re financially covered. While any hotel owner will be dismayed to see a guest injured, insurance cover allows you to throw all your energies into assisting your customer – knowing the financial implications are already sorted.

The value of minimising risk

You may think risk assessments, pricey control measures, health and safety audits and all the associated costs may not be worth it. But the cost of recovery after an incident, whether from a physical disaster or security breach, can be significant. Not only will you have to solve the immediate issue, you may need to close for a long period of time which costs your business big time. That’s not even considering the damage to your brand reputation.

It’s far more cost effective to do the groundwork now to minimise future problems.

That’s why so many of our customers turn to us for help. Yes, we’re an insurance broker first and foremost. We’ll help make sure you’ve got the right cover in place to financially protect you if disaster strikes. But our risk management services are also invaluable to the hospitality and leisure industry.

By ensuring you have sound risk management procedures in place, you can prove you’re doing your due diligence. This can help prove you’re a safe bet to insurers, reassure your staff you’re keeping them safe and (most importantly) demonstrate you’re looking after your customers.

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