Hotel Insurance Costs Jump

Insurance costs rose 62.5 percent per available room for U.S. full service hotels in 2003, compared with 2001, according to data just released by lodging industry tracking firm Smith Travel Research. The jump in costs reflects increased security concerns post-September 2001. Added operating costs come at a time when the industry already is besieged with falling room revenues and uncertain occupancy levels due to the weak national economy and drop in business travel.

Hotels' increased uncertainty gives corporate travel buyers added leverage as negotiations for 2004 room rates get underway next month.

"The industry actually saw decreases in the cost of insurance during the last several years of the 1990s," said STR president Mark Lomanno. While limited service hotels' insurance costs generally are less than for full service operators, their costs rose significantly in the 2001-2003 period as well.