Any hotel general manager can tell you that the hospitality industry is edging very closely to its peak pre-9/11 numbers. But over the last several years, hotels have had to face climbing insurance premiums on their way back to the top, according to a report released last month by PKF Hospitality Research. Although they represent a relatively minor portion of hotel operating expenses, rising insurance rates do mean that room rates are going up as well. The author of the PKF report, R. Mark Woodworth said that insurance rates tend to rise whenever hotel revenues are on the decline. From 1999 to 2004, hotel revenues declined by 1.5 percent across the country; hotel insurance doubled during the same time period. However, revenues grew 26.7 percent from 1995 to 1999, and insurance costs declined by 43 percent. Every added cost to hotels is paid for by increased room rates, but there are some measures companies can take to lessen insurance costs. “Our company has really been pushing safety initiatives, we provide incentives to employees for creating safe work environments and reducing accidents,” said Clay Andrews, general manager of the Renaissance Agoura Hills Hotel. “Insurance costs are still rising, but not as dramatically.” “A couple of years ago the company that owns our hotel, Davidson Hotel Company, really thrust safety into the forefront because of the rising costs of insurance,” said Clay. The efforts have dramatically cut down on claims and given guests heightened sense of security, he said. “We’ve also increased security at night. It gives our guests a sense of well being that there are extra bodies on the property,” Clay said. Extra security of course addresses terrorism concerns, which are at the forefront of meeting planners’ concerns, and may not be through with pushing insurance rates higher. Analysts are closely watching the fate of the 2002 Terrorism Risk Insurance Act, which could expire in the future. “This act requires insurers to offer terrorism insurance to businesses, but limits the insurance companies’ exposure in case of attacks by foreign terrorists. If the Act is not renewed, the fear is that the cost of terrorism insurance could skyrocket and become either a greater burden, or even unaffordable, for hotel owners,” Woodworth said. He went on to explain that while there was a small decline in insurance costs during 2004, figures from that year did not include costs faced by Florida hotels that were permanently or temporarily closed because of hurricane damage, and that it’s looking like insurance costs for those companies are rising rapidly in 2005. High expectations Still, Colleen Goldberg, general manager of the Best Western Carriage Inn said that hotels in the Valley and across the city are already expected to be expensive. Higher room rates are standard and insurance increases aren’t likely to dissuade many customers, she said. “The business is going to come anyway, travelers are going to pay more,” Goldberg said. “Occupancy taxes in this area are 14 percent, people already expect to pay more because it’s a large metro area. . . I don’t think these things are going to deter people. The price of gas has gone up too, but people still drive.” Goldberg said that business people who travel to the Valley for a few days a week are going to keep coming, and that the city can count on tourism business because of the draw of Hollywood, Universal Studios and other attractions. When it comes to negotiating insurance rates, hotels like the Best Western Carriage Inn and the Renaissance Agoura Hills Hotel are in a better position because they are parts of larger companies. “We shop (for better rates), and we have other hotels in our group, I’m sure single properties have a harder time,” said Goldberg. She’s confident that rates are going up for the parent company this year, however. “I’m sure (rates) have gone up, we just changed our provider, so that’s an indicator that costs have gone up,” Goldberg said.