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Up, Up, Up… Hotelier Insurance Rates. How to get off the Ferris Wheel.
No one needed to tell those of us in the hotel insurance industry that insurance rates were increasing steadily. So it comes as no surprise that an August 2009 study by PKF Hospitality Research reports that insurance costs are the fastest growing expense for hoteliers. Over the last ten years, rates have gone up 4.4% annually. From an average $265 per room in 1999 to $558 in 2004 (the latest PKF Hospitality study examined today’s recessionary period with that of the 2001-2003 period). It’s not likely to get better, either. PKF also predicted an estimated 5.3% drop in net operating income and a 1.1% decline in RevPAR for 2010.
Up also goes property insurance rates. Still reeling from some expensive hurricane seasons, insurers are tallying up the collective value of coastal properties and figuring their exposures. AIR Worldwide has estimated that coastal properties stretching from Maine to Texas amount for a $7 trillion exposure for insurance companies.
But the largest cost increase on the insurance bill – health care. Health care rates have continued an upward spiral, consistently posting double-digit increases year over year. While the new national healthcare laws propose to alleviate to some extent those costs, hotel owners will have to wait alongside all other Americans to see what the financial impact the new law brings to businesses.
Even with all the grim news, there is good news. Workers compensation rates are experiencing regional turnarounds, and experts predict the rates will remain steady. And hotel insurance packages are still priced competitively. Rates that increase in one area are often offset by rate decreases in another area.
As a hotel owner, you can protect your insurance premium investment by having regularly periodic reviews of your coverage and policy terms. If you’ve not compared your current coverage to today’s coverage options, you could be missing new programs and packages that include higher limits or more coverage areas for the same or similar prices. I’m a hotel insurance broker who specializes in your industry. I’m happy to work with you to review your policy and find alternatives that bring more bang to your premium buck.
Flickr photo credit: John and Keturah
