Some insights into how risk is being perceived in the hospitality sector following the Covid bodyblow to the sector;
As evolving technologies and changing consumer tastes bring new challenges to large leisure and hospitality businesses, the industry continues to suffer reverberations from Covid-19. Managers are keenly focused on risk however are unsatisfied with the insurance coverage available, according to Global Leisure and Hospitality Risk Outlook 2023, a new research report released today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
WTW’s survey found that the sector’s post-Covid recovery is far from complete, with about half the $300 million+ firms polled still some distance from business as usual.
- 47% observe a skills gap following an employee exodus from the sector.
- 46% feel a pinch from the shift to home-based leisure activities.
- 46% are now more focused on improved margins over the next two years than sales growth, the priority for only a third.
- 52% say increased competition from outside the sector is one of the greatest obstacles to their strategic objectives.
- 70% say the accelerated switch to digital is the greatest long-term legacy of Covid-19.
Many of the hotels, health facilities, venues and attractions, bars and clubs, restaurants, and other leisure and hospitality companies surveyed appear to be grappling with matters of risk and risk transfer:
- 44% say risk-related losses were higher or much higher than expected over the previous two years.
- Only 28% say the root causes of the risks they face are within their control.
- Almost three-quarters say they lack the data or knowledge to address risk.
- 59% measure and monitor their reputation, and 46% think reputational risk insurance is necessary (22% say it’s mission critical).
- 52% say their insurance covers damage to property only, but not the cost of business interruption if they are forced to close.
“Companies in the leisure and hospitality sector are still feeling the effects of successive global shocks and changing consumer behaviours,” observes Garret Gaughan, Head of Direct and Facultative at WTW. “69% of our survey respondents believe that they don’t have access to the right insurance and risk transfer solutions and 56% lack the right risk management tools and insight,” he reports.
“At WTW we can help clients in this sector navigate the marketplace to identify the most impactful coverage solutions available to them as well as identifying areas where an alternative approach is needed.”
The survey was conducted late in 2022 among more than 600 CEOs and heads of risk, operations, or compliance at leisure and hospitality companies world-wide with revenues in excess of $300 million. The complete report can be downloaded here.
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