Insurance Gaps in Luxury Hospitality Sector
Policybazaar for Business has raised concerns about the growing vulnerability of India’s luxury hotels to complex and costly risks in its new whitepaper titled ‘Securing Luxury Hospitality: Mitigating Risks for High-End Hotels’. The report highlights the inadequacy of standard insurance policies to protect premium hospitality properties as the luxury hotel segment is projected to grow at a CAGR of 10.10% over the next seven years.
The whitepaper warns that luxury hotels face increasing threats from natural disasters, guest liability claims, cyber breaches, and operational lapses. According to Sajja Praveen Chowdary, Head of Policybazaar for Business, “Luxury hotels are more than just service providers—they are brands built on trust and experience. When a single crisis can undo years of reputation, standard practices simply won’t suffice.”
Key Risks Facing Luxury Hotels
The report cites several key insights, including:
- Operational and legal risks are escalating, with hotels dealing with lawsuits due to accidents, safety violations, and other incidents that can quickly escalate into reputational damage through social media.
- Climate volatility is a growing concern, with India experiencing 27 cyclones between 2019 and 2024, and floods in tourism hubs making geography a critical underwriting factor.
- Assets require dynamic protection, particularly properties with heritage architecture, fine art, and luxury interiors that need specialized valuation and insurance.
- Brand value is at stake as interruptions in service or delayed recovery from incidents erode guest trust and long-term revenues.
The report references real-world examples of financial damage, including the 26/11 attacks on iconic properties like the Taj and Oberoi, as well as modern risks such as cyberattacks and significant guest compensation claims.
As the luxury hospitality sector continues to grow, the whitepaper emphasizes the need for tailored insurance solutions to address these emerging risks and protect the brand value and assets of high-end hotels.
