Hospitality Investing News - Central States April 2025

Insurance rates for the hotel industry are rising due to several key factors. Climate change and an increase in natural disasters, such as hurricanes, floods, and wildfires, have led to higher claims, causing insurers to raise premiums. Additionally, rising construction and repair costs make property damage more expensive to cover. Liability concerns, including guest injuries, security risks, and cyber threats, have also contributed to increased insurance expenses, as hotels face more lawsuits and data breaches. The COVID-19 pandemic has further impacted the industry, setting a precedent for large-scale business interruption claims, making insurers more cautious. Additionally, higher reinsurance costs—what insurance companies pay to protect themselves—are being passed down to hotel businesses. To negotiate lower insurance rates, hotels should focus on risk management by improving safety measures, such as installing security systems, maintaining facilities, and training staff. Bundling policies under one provider, increasing deductibles, and working with an insurance broker can also help reduce premiums. Competitive bidding by obtaining quotes from multiple insurers can create leverage for better pricing. A strong claims history, where the hotel demonstrates fewer insurance claims over time, can also lead to discounts. Larger hotel groups may consider captive insurance or self-insurance to manage risks more efficiently. By implementing these strategies, hotels can work toward securing more affordable insurance coverage while maintaining adequate protection.