The rising cost of insurance and employee retention are the major challenges facing the hotel sector, according to speakers at the fourth annual forum of FDs in the leisure industry.
Insurance premiums rose from about 1 per cent of revenue to nearly 4 per cent after 11 September. This has had a critical impact on balance sheets, according to Howard Atkinson, area director of finance at Four Seasons Hotels. "But you can't focus only on the cost--insurance is part of risk management and it's essential in this climate," he told Financial Management.
The idea of going to the insurance market with a shared risk had been discussed, said Ian Graham, director of hospitality solutions at Andersen, but the timing was not right. "The industry's ownership structure--where there is one brand, but individual hotels are owned by different parties--also works against this arrangement," he said.
Despite widespread pessimism about rising costs, the financial health of the sector is improving, according to Claire Mateunas, CFO of global establishment services, Europe, at American Express. "The industry did pick up more quickly than everyone expected after 11 September," she said, pointing out that Amex's latest European corporate travel index had revealed...