How Can Hotels Protect Themselves Against Bad PR.
By Melanie Nayer ~ Exclusive Column
Wednesday, 2nd November 2011
In a world where social media and 3G cell phone access has made it easier for bad news to travel fast, you'd think hotels would prepare against 'bad PR', in any form.

Now they can. Recent news by London-based insurers announces a new policy called "Hotel Reputation Protection 2.0", which will limit hotels' liability resulting from bad publicity.

How many times has your hotel been the unfortunate recipient of a bad tweet or Facebook post, or your hotel has been part of a larger scare in the mainstream media, which resulted in loss of business and a drop in average daily room rate? With the news of Aerosmith's Steven Tyler's fall in a Paraguay hotel and past reports of hotels with issues from everything including mold to bedbugs, bad PR insurance might be exactly what hotels need.

The Hotel Reputation Protection 2.0 policy has been created to respond to incidents that "lead to, or are likely to lead to, losses resulting from adverse publicity through any medium, from traditional to new media." That means hotels can protect themselves against everything from bad blog posts to negative reviews on TripAdvisor.

How does it work? The Hotel Reputation Protection 2.0 will provide cover for lost revenue revenue based on revenue per available room (RevPAR) figures. It also provides cover for the cost of hiring a crisis management team to assist during the first weeks of an unfortunate incident. The concept is to ensure that bad PR - whether from your guest on Twitter or a reporter on deadline - doesn't effect the amount of rooms the hotel sells on a per-night basis, based on projected average daily room rates for the hotel, as caused by brand damange.

The policy will pay up to EUR25 million for both the crisis management costs and the reimbursement of the reduction in RevPAR. The policy is held by Willis Group Holdings, in conjunction with Lloyd's of London underwriter Kiln. 

Granted, hotels can save a bundle by simply managing some of the smaller crisis through online and social media channels. However, executives as Willis say a larger policy could be the difference between losing a few nights sales at the hotel and destroying a brand name

"In the extremely competitive hotel industry, reputation accounts for approximately 30-40 percent of a business's overall worth. Therefore, damage to reputation, which spreads virally through social and other media channels, can have a significant financial impact," said Laurie Fraser, an executive at Willis. "Our product is designed to tackle both the actual loss of revenue and the costs of containment."

Hotels: What do you think? Will you invest in "bad PR" hotel insurance?

Melanie Nayer is a hotel reviewer and expert on luxury travel around the world. She has covered all aspects of hotels including corporate restructures, re-branding initiatives, historical aspects and the best of the best in luxury hotels around the world.

Melanie writes a weekly exclusive column for 4Hoteliers.com
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