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How to prepare for rise in natural disasters

The past few years have seen an increase in weather related incidents and natural disasters in the United States – an unwelcome spike which is not expected to slow down any time soon. In fact, according to Insurance Insider, global losses from natural catastrophic weather events totaled over US$105 billion in 2021, which is a US$16 billion increase over the US$89 billion in losses incurred in 2020.

Contributed by John Welty, SUITELIFE Underwriting Managers, a series of RSG Underwriting Managers, a Delaware limited liability company based in Illinois

Too many of these natural disasters had extreme consequences. The 2021 Texas deep freeze saw many towns without power for weeks. Similarly, the most expensive natural disaster of 2021, Hurricane Ida caused US$65 billion in losses with nearly 100 deaths.

Perhaps one of the most dangerous natural disaster threats to a hotel is a wildfire. With other disasters, such as hurricanes and flooding, property owners can complete preparations as warnings are sounded in the days ahead. Wildfires are fast moving and unpredictable, making it difficult to prepare for them. For instance, just a few months ago, the Marshall wildfire swept through a neighborhood in Boulder County, Colorado, burning down an entire city block, including a local hotel, in minutes.

The risks

While there is, in many instances, very little that can be done to prevent natural disasters, hotel owners and operators can take steps now to prepare for such incidents to mitigate their risk.

The risks hoteliers face related to natural disasters can go beyond the physical destruction of property or financial losses. Hoteliers could also risk reputational damage and costly litigation if it is found that they did not do all they could to communicate cancellations, evacuations or disaster plans with guests. Further, given the sharp increases in property values of late, hoteliers could risk inadequate claims checks if their property was not properly valued and insured for its current value. Unfortunately, this was the case for many homeowners impacted by the Marshall Fire. Many cannot afford to rebuild their homes because they were underinsured.

Before the storm

For any natural disaster preparation to be successful, comprehensive well-informed plans must be in place. But a well-written plan, drafted years ago and tucked away in a folder or computer file will not serve a hotelier well. Hoteliers must not only develop strong disaster plans, but make sure management and staff are intimately familiar with it. Consider the following:

  • Build a comprehensive Emergency Action Plan (EAP): An EAP will help with all aspects of preparation, response and recovery. Employees must be well-versed in the details of the EAP before disaster strikes.
  • Practice, practice, practice: In an emergency, panic can cause employees to forget their responsibilities. Hoteliers should hold frequent drills, acting out what to do in different natural disasters. This practice will also give staff the opportunity to ask questions and clarify information.
  • Perform risk assessments: By walking through properties and looking for vulnerable areas, hoteliers can identify weak spots to shore up before a storm. This can include bolting down loose items before a hurricane or removing delicate or electrical items from low places before a flood.
  • Visit with local authorities: Hoteliers can ask local fire departments and safety personnel to come on site and check the property for areas to improve as well as to review the emergency action plan. Authorities will also help conduct reenactments to test the emergency action plan, including simulations of active shooters, hurricanes, wildfires, etc.
  • Work with or contract a disaster mitigation company: A disaster mitigation company can jump in during or after the emergency to help. For example, when the power goes out, they can be on the ground with generators to get the power back quickly. Contracting with a disaster mitigation company can also help with insurance claims as they can help document damages and begin cleanup and recovery immediately.
  • Review insurance to value (ITV): As the real estate market fluctuates along with the cost of lumber, building supplies and labor, it is important to have property rebuild values reviewed on a regular basis. Hoteliers can work with their insurers to evaluate whether their insurance coverage aligns to what it would cost to rebuild their property in the event of a total loss.

In the heat of the moment

During a natural disaster or weather-related catastrophe, it may not seem like there is much that can be done to prevent losses, but there are ways hoteliers can stay proactive and help keep employees and guests safe. Here are a few:

  • Follow the guidance of authorities: The American Red Cross and other organizations also have applications that offer guidance of what to do before during and after an emergency. Be sure to follow the guidance of local authorities as well related to evacuations, weather, power outages, area support and more.
  • Know the risks and how to respond to them: Monitor the status of the storm and communicate it, along with any closures or evacuation plans with guests, staff and any other personnel onsite. This information can be posted on the hotel website and any other hotel owned channels, such as social media.

After the fact

 The destruction that follows in the wake of a storm or other natural disaster can feel overwhelming. However, the time immediately following a disaster is imperative. Fortunately, hotel owners and operators can take steps to minimize damage and maximize resources after a weather-related event:

  • Make sure everyone is safe: Local authorities and organizations such as The American Red Cross will share when it is safe to leave the property following a natural disaster. Hoteliers should check on all guests, staff and personnel on site and communicate that it is safe.
  • Evaluate and document: Once the location has been secured and everyone is safe, hoteliers should immediately survey for property damage and document. Follow guidance from your insurer. This is where partnering with a disaster mitigation company can help. It is also important to document all cancellations or cancelled events.
  • File a claim as soon as possible: As soon as all losses have been tallied and documented, file a claim so that your insurance company can begin to work through the details. The more details you have to give your adjuster up front the better. If you have any questions, contact your insurer.

Hoteliers strive to make their guest experience as positive as possible. While natural disasters and weather-related incidents may be out of your control, you can still positively impact guests by knowing the risks, being prepared and having a plan in place. Guests will feel comfortable at your property knowing you value their safety.

The information contained in this material is for information purposes only. This material should not be relied on or treated as a substitute for specific advice relevant to any particular circumstances. Appropriate steps to manage any of the risks described herein will vary depending on particular circumstances. This material should be considered in addition to all other relevant information, including the advice of professional advisors, best practices suggested by health and safety organizations and the requirements of any applicable policy of insurance.

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