The threat of terrorist activities, both online and offline, is having a knock-on effect for the otherwise booming hospitality industry, according to a leading insurer in the sector.
Christian Ryan, hospitality practice leader for Marsh USA, one of the global leaders in insurance broking and risk management, told Insurance Business
that new records are being set across the hospitality sector as a result of the vertical growth being experienced by the industry. But for an industry which depends on brand and reputation as its main currency, that growth is under threat from acts of violence, both digital and physical.
“Cyber risk is certainly one of the bigger, unquantifiable risks. We know what the average claim would be if someone falls and breaks their leg or hurt their back. If there is some sort of contamination outbreak, then there is insurance coverage for it. We know if a building burnt down today, how much we could replace it for, but cyber risk is not fully quantifiable,” Ryan said.
“All these hotel companies live and breathe by their brand and reputation. And anything that might hurt their reputation is what concerns a lot of our clients. And that doesn’t necessarily have an insurance solution around it. A lot of our clients are looking to us to how to handle PR and social media,” he said. “It’s all in the planning and preparation for these events.”
Hospitality is completely dependent on the economy and since the economic upturn, America has experienced the inflow of a lot of foreign money: “The Chinese have come into the market with a vengeance. The last two hotel deals -- the Waldorf Astoria and the Baccarat hotel -- were bought by them,” said Ryan, noting that both these deals set records in the market, with the Baccarat going for more than $2m per room.
But despite hospitality being one of the strongest growth sectors in the US, the question is whether that money will keep flowing in with so much potential risk to brands. Or whether insurance is enough to alleviate some of that threat.
“Take the example of the attacks at the Bataclan concert venue in Paris,” Ryan said. “If the concert venue was a hotel, it probably would’ve been very damaging to the brand. I would say brand and reputation is more about crisis management.”