Hospitality and tourism businesses are often vulnerable to disruption. Having risk mitigation strategies in place can make sure your business thrives even through adverse events.
South Africa’s tourism sector remains vital to the country’s economic growth, contributing over 8% of GDP growth last year, and supporting close to 1.7 million jobs. Tourism and hospitality businesses are often small and agile, priding themselves on a personalised and unique experience for customers. However, they also face a range of potential pitfalls, and without adequate protection, any one of these could force business closure.
Risk mitigation strategies help you stay resilient in the face of disruption
In an industry as diverse as hospitality and tourism, business owners are exposed to a range of risks. That’s why insurance for the hospitality industry is often best delivered by a knowledgeable broker who works with you to understand your unique exposure. They can then tailor-make insurance solutions to match these needs. This can be put in place with a financial risk mitigation plan to protect your assets, reputation and livelihood.
In one recent case, a restaurant kitchen burnt down and the business was forced to close for an extended period. Even though it received no income while renovating and repairing the damage, overheads such as rent, electricity, water, salaries and payments to suppliers remained due at the end of each month.
An incident like this has the potential to ruin a business. Fortunately for the restaurant owner, the loss of income and renovations was covered under business interruption insurance.
Tailored hospitality insurance
Hospitality businesses face an array of risks, including loss of income due to fire, theft, cybercrime, public and third-party liability, and natural catastrophes, to name but a few. For guesthouses, there’s also the potential for property damage from paying guests. Business liability cover can protect you from reputational damage should clients be unhappy with their experience. You should always have business interruption insurance and ensure your coverage adequately protects you for the risks you face.
Make sure your policy includes protection for the following:
- All property, such as contents, equipment, improvements, electronic data processing equipment, outdoor property and stock.
- Business interruption, to protect against financial loss, should the business be faced with a setback following a loss.
- Machinery breakdown, to cover the repairs or replacement of business machinery following a breakdown of or material damage to the unit.
Businesses must also protect themselves against general liabilities in hospitality and entertainment. For instance, if you offer catering services, food poisoning is a critical area of liability, so that you are covered should a client be sick or injured while in your establishment.
Review your cover to avoid being caught short
One of the simplest ways of mitigating risk is to review your insurance cover regularly and update it when needed. If you do this once a year, you have peace of mind that your venture is protected against potentially devastating financial losses. Working with a broker who has specialist expertise and hospitality knowledge is critical.
At Santam, we believe insurance should be tailormade to your needs, rather than the other way around. Take the next step in your business, and choose a partner that wants to see you thrive and has the knowledge and expertise to help you manage risks and plan ahead.