Hundreds of thousands of businesses and 50 million people in eight U.S. states and parts of Canada were disrupted by the largest black-out in North American history last month. With no plans to upgrade the current transmission system, a widespread power outage could happen again. While power outages pose a significant threat to almost all businesses, the hospitality industry faces several complex challenges in the event of a blackout. Responsible for thousands of travelers, hotels must prepare for a host of issues to help ensure the safety of their staffs and guests and to maintain operations in an emergency.

In a blackout, your hotel must accommodate thousands of guests without essential services like water/sewer, air-conditioning, elevators, communications (both cellular and land lines), and keyless entry systems. In addition, you should have an extensive hotel evacuation procedure and emergency response plan to ensure the safety and security of your staff and guests. Once power is restored, your hotel must re-establish normal business operations and begin to process insurance claims as soon as possible to minimize losses.

"Fearful that guests would hurt themselves climbing stairs or stumbling around their rooms in the dark, hotels decided to turn away — or even evict — people with bookings because the properties had no power."
(The Wall Street Journal, 8/20/2003)

If nothing else, the recent blackout should make hospitality executives question how well they are currently able to manage their portfolio of risks, not just individual ones. They should be thinking beyond individual business operations and asking questions that are fundamental to their overall businesses, such as:

Emergency Response Planning

• Do we have a plan to accommodate guests during an emergency?
• Do we have adequate procedures to assist injured employees and guests?
• Is the staff properly trained to implement our emergency plans?
• Do all employees understand their duties during an emergency?
• How well integrated are our emergency response plans with those of public authorities?
• Do our utility outage plans address loss of electricity, potable water, sewer, and other critical resources?

“Regardless of where [they were] located in the New York City area, hotels were rolling out crisis management practices and procedures. … Whether that fared well for hotels or not still remains to be seen. But, the general consensus thus far is that hotels will have taken a financial hit from the blackout, like many other businesses in the area.”
(hotelbusiness.com, 8/18/2003)

• Have we identified potential threats and assessed their impact on our guests, staff, assets, operations, and the environment?
• How do we know if data was lost? If so, how is it recovered?
• How quickly can we restore critical business functions?
• Do we have manual procedures in place to continue critical operations in the absence of information technology systems?

• Have we taken the appropriate steps to effectively manage both pre- and post-injury processes?

• Are we aware of our potential liabilities in the event of a power outage?
• Do we have a plan for mitigating the damages associated with blackout related liabilities?

“Tourists staying at hotels in New York City were forced to climb stairs to their unlit and stiflingly hot rooms. In some hotels guests were unable to enter their rooms because the ness electronic locks did not function. Many tourists slept in hotel lobbies, in train stations, or even in the streets.”
(USATourist.com, 8/15/2003)

To help address these and related issues, there are a number of solutions that executives can use to help better plan for, survive, and quickly recover from the unexpected disruption of normal business operations. These include:

• Emergency Response Planning: Helps companies develop effective decision-making procedures and execute protective strategies for potential threats including utility outages, fires and explosions, terrorism, hazardous material spills, and natural hazards such as earth quakes, hurricanes, tornadoes, hail, and floods.
• Business Continuity Planning: Systematically identifies critical business and IT processes and strategies that can help a company stay in business in the event of a severe disruption to operations.
• Business Risk Consulting: Identifies, prioritizes, and assesses the critical business risks across the enterprise to ensure an effective, corporate-wide plan to proactively manage the potential consequences of a disruption to an organization's operations.
• Corporate Risk Communications: Provides timely and appropriate information to reassure different audiences — including employees, shareholders, clients, analysts, the media, vendors, and the public — that you are effectively managing related challenges.
• Property Loss Consulting: Helps companies navigate through a property loss, from reporting the claim, collecting loss data, quantifying damages, policy/coverage interpretation, through settlement.
• Workers Compensation: Helps companies manage workers compensation costs through diagnostics, benchmarking, training, and analysis.
• Claims Consulting: Provides a review of a company’s property insurance policies and assists with measuring, documenting, and recovering major direct or indirect losses through investigation and forensic accounting and claims services. Develops plans for handling self-insured disability and third-party claims. Provides dispute resolution services and insurance claims accounting and preparation services.

If you have any questions or would like additional information, please contact us.