The Hidden Risks in Hospitality: What Every Restaurant and Hotel Owner Should Know

Are hidden risks threatening your hospitality business? Running a hotel or restaurant can be lucrative, but it can also be risky. You’re managing a significant workforce, welcoming the public onto your premises, and dealing with sometimes-sensitive issues related to food and accommodations – there’s a lot of room for things to go wrong. Are you certain you have everything under control?

What Risks Do Restaurant and Hotel Owners Face?

Restaurants and hotels face a wide range of risks. Some common claims include:

• Workers’ compensation claims stemming from back injuries, burns, and other worker injuries.
• Property damage from fires, storms, or vandalism.
• Third-party liability resulting from slip-and-fall incidents, foodborne illnesses, and other customer injuries.
• Employment practices lawsuits arising from allegations of wrongful termination or other employment actions.

However, these risks represent just the tip of the iceberg. Other hospitality risks could also threaten your business, and if you’re not prepared for them, they can be especially damaging.

1. Customer Discrimination Allegations

Employees aren’t the only ones who can file lawsuits alleging discrimination. Customers can also make claims against businesses, and these lawsuits are surprisingly common.

For example, a customer could claim that your business violates the Americans with Disabilities Act (ADA) because it is not wheelchair accessible, does not provide wheelchair accessible restrooms, or does not provide an accessible website. That last category of litigation is on the rise, according to Fisher Phillips, which says that plaintiffs’ lawyers have been accusing publicly available websites of being inaccessible to users with disabilities.

2. Food Allergies

If a dish is contaminated with E. coli or salmonella, that’s obviously bad news, but what if it’s “contaminated” with common allergens, such as eggs, soy, or wheat? According to Food Allergy Research & Education (FARE), food allergies are on the rise, with the prevalence of food allergies among children increasing by 50% between 2007 and 2021. Approximately 10% of adults have a food allergy, and some can be lethal.

Unfortunately, food allergies aren’t always taken seriously. If a restaurant or hotel worker states that an allergen is not present in a dish, but it is, the business can be held liable, and lawsuits are common.

In one recent example, WDW News Today says a woman is suing Walt Disney World over allegations that the staff at a restaurant at the park ignored her life-threatening allergy. She experienced an allergic reaction after eating a salad and had to spend three days in the hospital.

In another case, Newsweek says a man is seeking up to $1 million in a lawsuit against Whataburger after the restaurant allegedly served him a burger with onions despite his request to leave onions off due to his allergies.

3. Liquor Liability

For restaurants and hotels, liquor sales can be a major source of revenue. If they’re not careful, however, liquor sales can also be a major source of liability.

Serving underage patrons is an obvious problem, and it can land hospitality businesses in hot water, exposing them to fines, risking their liquor license and possibly even leading to criminal charges. Overserving is another risk. Many states have dram shop laws that can hold bars, restaurants and other businesses liable for injuries or deaths that occur after overserving someone.

Lawsuits are fairly common. In one case, Long Island Press says a family is suing two restaurants accused of overserving a man who went on to cause a crash that killed two teens.

4. Cyberattacks

Restaurant and hotel owners are likely aware of the rise of cyberattacks, including phishing scams, ransomware and data breaches, but they may still be underestimating their exposures.

Hotels and restaurants typically store sensitive information, including financial records, so they are prime targets for data breaches and ransomware. Many hotels and restaurants also rely on computer systems for operations, so a cyberattack could make it impossible to take orders, make reservations, check in guests, or even lock and unlock rooms. According to Bitdefender, a resort in Austria decided to get rid of smart locks after it was hit by ransomware three times in a less than a year. While its systems were down, the resort was unable to issue new room cards.

According to NBC News, a cyberattack against MGM Resorts resulted in losses of around $100 million. While attacks against huge companies tend to make headlines, hackers also target smaller businesses.

Are You Covered?

Even if you have standard insurance, coverage gaps could leave you exposed to hidden risks. Heffernan Insurance Brokers provides insurance designed for the hospitality sector, including hotels and resorts. Learn more about our specialized risk management and insurance programs for hotels and restaurants.