The year 2025 is forecasted to present a challenging operating environment for the South African hospitality industry. Like our global counterparts, economic uncertainty, geopolitical tensions, climate change, and increased competition are just some of the factors reshaping the risks that insurers must manage.
In the October edition of Dewald’s Desk, Robyn van der Walt, Senior Account Executive at SATIB Insurance Brokers, unpacked this topic.
Intrigued? Here’s what you need to know to be insurance-ready for 2025!
Dewald highlighted the following key challenges facing the hospitality industry:
- Economic uncertainty: Fluctuating exchange rates, rising inflation, and potential recessions can impact consumer spending and travel patterns.
- Geopolitical tensions: Global conflicts and instability can disrupt travel routes, deter tourists, and increase security concerns.
- Climate change: Changing weather patterns and more frequent and severe droughts, floods, and storms pose significant risks to hospitality infrastructure and operations.
- Increased competition: The rise of online booking platforms and alternative accommodations has intensified competition within the hospitality industry.
- Heightened client expectations: Today’s guests have higher expectations for personalised experiences, value and sustainability.
Implications for hospitality insurance
While some of these challenges aren’t new, stakeholders need to be very aware of them for the new year and what knock-on effect they could have on your insurance.
These challenges have far-reaching implications for hospitality insurance, including:
- Increased claims: Natural disasters, property damage, and other claims have risen due to climate change and operational risks.
- Risk assessment challenges: The evolving landscape requires insurers to continuously assess and adapt their risk assessment methodologies. Check and check again! It’s a continued work in progress.
- Increased cost of insurance: South Africa’s insurance market faces rising costs due to the need for international reinsurance coverage. This is influenced by global reinsurers’ perception of South Africa as a high-risk market, which translates into higher pricing.
What you need to know as a hospitality stakeholder
Dewald also outlined the various roles and responsibilities stakeholders need to be aware of when it comes to hospitality insurance:
- Guests/travellers: Travel insurance is highly recommended for covering unexpected events like cancellations, medical emergencies, and evacuations.
For example, if a guest’s flight is cancelled due to unforeseen circumstances, travel insurance can reimburse them for non-refundable deposits and expenses. Guests should also carefully review indemnity agreements and adhere to the rules and regulations set by the lodge or tour operator. This helps protect both the guest and the business from liability. - Tour operators/direct management companies: Public liability insurance is essential for covering liability arising from equipment malfunctions, accidents during guided tours, or injuries caused by negligence.
For instance, if a kayak rented by a tour operator develops a hole and causes an injury, public liability insurance would cover the resulting claims.
Passenger liability insurance is especially crucial to protect against accidents if employees or agents drive guests. This is especially important for transfers to and from airports or other destinations.
It’s also important to advise clients to have travel insurance with medical evacuation coverage. This ensures that guests can receive critical medical care, even in the most remote locations – where many of our clients operate. - Lodge owners/hotel owners/bed and breakfasts: Public liability insurance is essential, covering accidents and injuries on the property, including wildlife encounters.
For example, if a guest is injured by a wild animal on the property (trust us, it happens), public liability insurance would cover the medical expenses and potential legal claims.
Passenger liability insurance protects against accidents involving vehicles owned or operated by the business. This is essential for lodges offering transportation services to guests and/or game viewers on safari game drives.
Medical evacuation insurance is essential for both guests and staff, especially in remote locations. It ensures that individuals can be transported to a facility with appropriate medical care in case of an emergency.
To mitigate some of these risks, SATIB prioritises placements with A-rated reinsurers. This ensures financial stability and the confidence that claims will be handled effectively, providing peace of mind for policyholders. SATIB also continues to work with its insurance partners to develop innovative products that address the specific needs and risks of hospitality businesses in a changing environment.
Navigating the challenges
To successfully navigate these challenges, all stakeholders in the hospitality industry should:
- Embrace risk management: Implement robust risk management strategies to identify, assess, and mitigate potential risks, such as fire response plans and medical emergency protocols.
- Partner with their brokers: Collaborate with us to develop tailored insurance solutions that address your specific industry and business needs. We are specialists for a reason and understand this industry. We know that there is no one-size-fits-all approach – your needs differ, and we’re here to tailor your insurance solution for 2025.
- Focus on sustainability: Incorporate sustainability practices into operations to reduce environmental risks and attract eco-conscious travellers.
By proactively addressing these challenges, the South African hospitality industry can build resilience and ensure a sustainable future, with each stakeholder taking ownership of their role.
Don’t forget your SATIB broker is here to work together with you to achieve this. Contact us today for your personalised check-in to make sure that you’re 2025 insurance-ready!
