Liability concerns facing the hospitality industry today

Slips and falls due to water make up a large bulk of hotel liability concerns and are particularly common near the hotel pool and F&B areas.

Slips and falls due to water make up a large bulk of hotel liability concerns and are particularly common near the hotel pool and F&B areas.

Like any business, hotels must be aware of liability. The most common type of liability they face is in the form of slips and falls, which can be combated through the use of signs in problem areas (near ice machines and pools, for example), while liability over the safety of guests’ personal property comes in a close second.

Adam Docks, a partner at international law firm Perkins Coie, in Chicago, said that falls are a constant concern for hotels, and he added that hotels have many liabilities that have been around for some time and are becoming more prolific due to an increase in guests resulting from an increase in travel.

Harry Gorstayn, GM at the Radisson Blu Mall of America, in Bloomington, Minn., said technology has made protecting guest property easier than ever before, as it is harder now to get into guestrooms without a keycard.

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“Simple things, like locking the doors to event space when guests aren’t in there, can go a long way for avoiding incidents,” Gorstayn said. “Signs are also very important; if you have enough repetition, eventually most guests will read or listen to them. Also, having brass signs on the floor can be effective.”

Gorstayn said preventing kitchen fires is also a major component of hotel liability. Oil buildup in kitchen equipment can lead to fires that, when triggered, can’t be controlled.

“Once per month, inspect and clean your kitchen hoods to keep combustibles away from the ceiling,” Gorstayn said. “Monthly safety meetings, sprinkler tests and alarm drills can also keep the back of the house safe. These tests also allow you to see how employees react in an emergency, and clue you in on who needs more training.”

To manage liability on the employee side, Docks recommends that hotels frequently investigate updates on laws pertaining to minimum-wage increases, especially in urban markets.

“There are ongoing updates with respect to labor laws, and hotels have to stay on top of these laws,” Docks said. “In this administration, there have been a number of initiatives that are more labor-friendly. Presumably, there are also additional costs to be aware of.”

Five tips to address liability concerns

Proper employee training is one of the most effective ways to avoid a credit card data breach in hotels.

Proper employee training is one of the most effective ways to avoid a credit card data breach in hotels.

1 Safety meetings should be held regularly to refresh memories and make guest and employee safety a habit. Harry Gorstayn, GM at the Radisson Blu Mall of America, in Bloomington, Minn., said hotels should set parameters so they know what to expect. “Hotels can save a lot of money following little details,” Gorstayn said. “Important things add up and, if everyone is safe, business will pick up and you won’t give money back to insurance companies.”

2 Hotels are adopting more and more services to streamline the guest experience in areas such as check-in and reservations, but evolving technology always introduces new vulnerabilities. Operational solutions, such as keycards that allow guests to visit only the floor their room is on, can cut down on unwanted people wandering every floor.

3 Employee training has never been more important. From recognizing when to stop serving guests alcohol to knowing what sites not to visit to avoid facing data theft, training can help prevent problems from surfacing before they appear.

4 Outdoor lighting, especially in parking areas, should be maintained. Hired security can help secure parking areas and, when hiring security, consider hiring privately. Security on staff will care about the property as much as its GM.

5 Staff should keep an eye out for the flooring in areas where drinks are often carried. Spills will happen and, when spotted, should be taken care of promptly. Installing bumpy or grooved flooring in areas vulnerable to water can help avoid falls as well.

Data theft: The greatest liability concern facing hotels today

Some of the greatest liability concerns hotels face today are digital in nature. Cyberattacks, and especially breaches of credit-card information, topped headlines in 2014.

Nicholas Economidis, underwriter at specialist insurance provider the Beazley Group, said the biggest mistake hotels can make regarding guest credit theft is thinking, “This cannot happen to me.” Hackers, he said, are opportunistic and do not discriminate by segment or location. They are after credit-card information because it is the most commonly stored data from business to business, and they look for any open door to get to it.

Harry Gorstayn, GM of the Radisson Blu Mall of America, in Bloomington, Minn., said his hotel no longer stores credit-card information. Instead, when a card is swiped at the property, he said, it is associated with a code, not a personal identification number. If a breach were to take place, hackers would only obtain codes that were meaningless to them.

➔ “Hotels need to work with auditors to reduce the [data theft] numbers to a definite. You need to be an active participant in the process.”

Nicholas Economidis, underwriter, Beazley Group

Economidis said anything from hackers and electronic intrusion to malware could be the source of a breach. Even employees responding to credit-card provider requests could present an opening to data thieves.

Once data have been compromised, security experts can easily lock the thieves out, but it is difficult to know when a system has been infiltrated. If a breach occurs, Economidis said, the incoming forensic audits can be managed to avoid paying maximum penalties.

For example, Economidis said if a company reporting a breach determines that 25,000 accounts were compromised and 100,000 may be vulnerable, auditors will treat the situation as if 125,000 accounts were lost.

“Hotels need to work with auditors to reduce the numbers to a definite,” Economidis said. “You need to be an active participant in the process. Don’t make conservative assumptions; you can help them find better information.”

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