Hotels And Claims For Property And Business Interruption

In late 2004 several fires occurred in Hotels in Australia. They include three in Victoria: -

• Commercial Hotel, South Morang.
• Buckingham Hotel, Footscray. Accommodation facilities were damaged.
• Irwins Hotel, Ballarat. Accommodation severely damaged.

Two in Tasmania: -

• Taroona Hotel, Taroona.
• Swan Inn, Swansea. The public bar, saloon bar, kitchen, dining room and manager’s residence were destroyed.

One in NSW: -

• Terminus Hotel in Albury. Only the bottle shop area was saved.

Many decisions must be made during the course of a claim for an hotel.

Make Safe/Demolition – Depending on the extent of damage it may be necessary for the entire building to be demolished. If partially damaged the undamaged portion will need to be made safe and secured.

Loss Minimisation – With the building made safe attention must quickly turn to loss minimistation. It is a condition of the Mark IV Industrial Special Risks policy that the Policyholder excercise due diligence and take all reasonable actions to minimise the loss. If the building was destroyed alternative premises should be considered. If the hotel is in a regional centre this may not be possible and all energy must be directed towards fast tracking the building reinstatement. There have been many cases where bars have been established in hired portable buildings to generate some revenue while the rebuilding proceeds.

The hotel may earn revenue from its bar, kitchen, dining room, gaming room, accommodation, etc.

All efforts need to be made to restore revenue from all sources at the earliest opportunity.

It may be necessary to retain key staff such as the chef to ensure patrons return once the property is reinstated.

Communications including, mail, e-mail, telephone and facsimile may all need to be diverted.

Property Reinstatement - With loss minimisation procedures in place property reinstatement needs to be carefully planned. Specifications to reinstate the building to the pre-fire configuration need to be prepared. Quotations to rebuild in accordance with the agreed specifications need to be obtained. Plans need to be submitted to council and planning approval and permits obtained. Authorities such as the National Trust may be involved if the hotel traded from an historic building.

If rebuilding to a different configuration it is imperative that the above information is obtained as the insurance cover will only respond to pre-fire floorplan. Cover may exist to upgrade the pre fire structure to comply with current building regulations.

Winning Back the Customers – Once the building is reinstated the loss minimisation program will need to be modified to win back patrons. This may involve: -

• A grand re-opening including entertainment, discounted drinks, discounted meals, gaming voucher offers.
• Ongoing discounts and offers until normal revenue levels resume.
• Accompanying sign writing, sandwich boards, leaflet drops, etc.
• Advertisements in the local paper and on the radio.

Specialists including claims preparers, loss adjusters, architects, builders, engineers, etc have experienced these losses on many occasions and are often available to assist.

Author

Published with permission of Claim Solutions Pty Ltd.

Insurance Policy

Policy Description: - Various

Insurer: - Various

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