By Kim Gore
For all the benefits of technology, it also comes with risks – like heightened data privacy concerns that are always top of mind. Other concerns are the growing occurrences of active shooter violence and other forms of terrorism that require the industry to step up its focus on safety and security. And the spreading tendrils of the #MeToo movement have implications for every facet of the business.
Here’s an overview of what we’re seeing on the horizon and the risk implications for the industry.
- Balancing technology’s benefits and risks
It’s hard to escape the increasing pace with which technology is permeating the hospitality industry. In addition to operational efficiencies, technological advances like artificial intelligence are enabling exciting new hotel guest experiences, from robo-concierges to almost instantaneous check-ins through facial recognition. And a trend toward pay-at-the-table processing may cut down on credit card data loss – 60 percent of which involves restaurants. And while the appeal is apparent, technology’s conveniences and efficiencies must be balanced against the risks and costs of cyber crimes and data breaches for this industry. Payment card fraud alone is expected to reach $32 billion by 2020, and the hospitality industry continues to be a lucrative target. In 2019, cyber liability coverage will continue to be a critical element to protect any hotel or restaurant.
- Safety and security concerns heighten
It’s possibly more unusual to go a week without an active shooter incident than with one these days, and small wonder that hotels are among the likely targets. They’re designed to be friendly and welcoming, open to the public and without a lot of obvious security screening. The Pulse nightclub tragedy in 2016 made security a more top-of-mind consideration, with the point hammered home again with the Las Vegas massacre lodged from the Mandalay Bay hotel and casino. It’s making insurance carriers ask a lot more questions. Especially as hotels host more live events, they’re expected to take on more responsibility for safety plans that factor active shooter and terrorism contingencies into the mix. And while many mistakenly think coverage is built into their business liability coverage, it’s typically the bare minimum. In 2019, carriers are building out active shooter/terrorism coverage with business interruption, brand reputation protection and loss of income.
- Impact of #MeToo movement spreads
The #MeToo movement has only gained momentum and impact in the last few years and the hospitality industry hasn’t escaped unscathed. It hasn’t just been a matter of celebrity chefs outed for abusing their power. Of the 89 percent of the hospitality industry’s workers who said they have been sexually harassed, 56.3percent said it had been by a member of the public and 22.7 percent said it was by a manager. In 2019, every organization in the hospitality industry should be taking a closer look at its employment practices, and harassment is just the tip of the iceberg. In addition to sexual harassment, the industry needs to start reviewing employment issues like failure to promote and wage and hour issues that will be scrutinized under their employment practices liability policies.
- Hospitality can do well by wellness
The wellness economy has exploded into a $4.2 trillion industry, growing at a pace nearly twice that of the global economy. And while travel is generally anemic (down 3 percent), those in the hospitality industry that have played the wellness card have thrived. The spa industry has grown by 9.8 percent and wellness tourism by 6.5 percent. In 2019, leveraging the trend will have hotels adopting spa-style and health-oriented amenities, often in the guest rooms themselves, with yoga mats in closets and classes streamed on televisions. The trend is also reshaping the restaurant business, with sustainability, provenance and hyper-localism continuing to be influencing factors.
- When deliveries deliver more auto exposures
Restaurants are seeing competitive pressure on every front, with the “do-it-yourself” players catering everything it takes to make a quality meal except the chef and to-go order delivery services exploding. In 2019, more restaurants will take on delivery services to compete, which may or may not make up for what they’re losing in market share. They will, however, need to keep an eye on auto insurance rates and car repairs as well as the pros and cons of payrolled or contract drivers, all of which will increase exposures and risks.
A new year is closer than you think. You’ve surely started seeing or experiencing the impact of these hospitality trends, but be ready. They’re only going to deepen in the months ahead.
HUB International’s team of brokers is available to work with you in understanding and managing risk and insurance issues at your organization.