Control losses before they happen

This year is being heralded as an extremely difficult year for the hospitality industry, with weakening occupancy figures and softening room rates. Added to the unsettling mix are some rather adverse trends that are surfacing in the area of loss control.

Stover

As companies are aggressively searching for ways to control expenses, they may focus on methods to increase productivity and/or reduce headcount. This process may increase stress on line employees and perhaps even foster a disconnect between them and your company's basic philosophies. It is not uncommon for a stressed employee to adopt a "me first" attitude coupled with the belief that they are being worked too hard and the company does not care about them. This toxic mix can easily lead to employee theft, malingering and work-related injury fraud. Savvy managers will work to keep lines of communication between management and associates open and strive to keep them informed about current and future plans. Those hotel companies that share information on occupancy, rate, revenue, etc., with their associates usually have fewer negative incidents. Fostering an attitude of shared hardship with a promise of future reward for loyalty and productivity is a very successful tactic.

In the quest for revenue, beware the pitfalls of relaxing your standards to attract guests. Reducing your room rates to increase occupancy may backfire if you attract the "wrong" kind of guest. Upper scale properties that try to compete with middle-market or even economy lodging may appeal to the type of clientele that damage your reputation or even commit illegal acts in your guestrooms. There has been an uptick in drug sales and manufacturing in mid- to upscale properties and even an increase in filming pornographic movies in hotel rooms. These undesirable guests, attracted by lower rates and upscale amenities, have become a major headache to several lodging companies. To prevent incidents such as these, hotels are encouraged to follow these guidelines:

* Do not relax your policy on renting to minors and locals. If current policy is not to rent rooms to those under 18 and restrict renting to locals, keep this policy in place. If you do rent to young adults, consider publishing a "Rules of Conduct" outlining what is and is not allowed on property and the consequences for violating the rules (eviction, calling the police). These rules should address illegal activities, parties in guestrooms, minors with alcohol, overcrowding, etc.
* If you have cash-paying guests, ask for a picture ID and photocopy it. All too often guests misbehave on properties because they feel they are anonymous and there are no consequences for bad behavior. A government-issued ID will ensure they are no longer anonymous.
* Hotel staff must be trained to respond when something doesn't look right. If a guest's attitude or behavior arouses suspicion, train them to report it to management or the police immediately.

We have weathered other economic storms in the past and will come out the other side of our current one with a healthier industry. Remember: "Act in haste, repent at leisure."

Jim Stover is the VP of Hospitality Loss Prevention at Arthur J. Gallagher Risk Management Services Inc. He can be reached at Jim_Stover@ajg.com.