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Interrupting your business: Is your Guest House Covered?
August 29, 2018

As budget hotels increase and a new trend of ways to rent your home emerge in todays digital age, the thoughts of Guest Houses are considered something of the past. However, as UK weather soars, the idea of a ‘staycation’ is becoming ever more popular and Guest Houses are presenting a steady rise in the UK market.

A large majority of Guest Houses are family-run and rely on occupancy as their sole income. Business interruption can come in many forms, and is essentially any occurrence that interrupts the daily running of your business. In the case of a Guest House, this is the ability to fill your rooms.

In 2016 the Lake District suffered heavily with rain, there was a difficult start to the year post-floods, with ongoing road and access issues, however occupancy still increased marginally on the previous year. Whilst bad weather cannot be avoided, in-house risk can be. Risk management is something that needs to be a high priority for Guest Houses. No matter the size of your Guest House, risk is always around the corner, unnecessary risk can cause business interruption. However, this can be avoided if the appropriate precautions are taken.

Making a list of all the potential dangers to your business is a thorough way of taking the correct steps to minimise the effects of business interruption. A thorough fire risk assessment should be carried out each year. One key element to focus on is fire. No matter the size of the blaze, a fire would not only cause a physical interruption to the business, but in the long run it could potentially harm recurring business if guests were to leave reviews letting others know of the fire dangers.

You may own and run your business yourself, or maybe you have a small staff list, but either way you need to make sure that staff are fully trained in case of an emergency. Precautions need to be taken to identify potential risks that could lead to business interruption.

Measures you can take:

  • Never leave cooking on the hob or electrical appliances unattended
  • Smoke, heat and CO detectors
  • Annual gas checks
  • Fire resistant furnisher
  • Highlight fire exits
  • First aid kits on standby

Most Guest Houses would be running as a business for a long period of time, but whether you are in a new build or an old building, a check-up of the internal hardware is key. Minimising the chances of disruption caused by faulty roof’s or burst pipes. With the weather in the UK ever changing from 35-degree heat to minus temperatures the Guest House itself can feel the effects of wear and tear over the course of the year.

Unfortunately, even if you follow a robust risk management process, some events are beyond your control, and you could face a situation that causes business interruption. In these scenarios, it’s important for you to understand what you can and cannot claim for.

For instance, insurers will look at your net profit rather than the gross profit. Whilst your Guest House hasn’t made money from the room being full, you also haven’t had to cover the cost of letting the room such as changing the bedding, supplying breakfast and paying electricity bills for those certain rooms/guests. Because of this, you will not be able to claim back the full cost of the room being unoccupied due to a business interruption.

You also need to think about whether you have removed the booking from any listings? It is best practice to not remove it, you cannot claim back from the loss of profit if you cannot prove that the room has been requested. If the cause of your business interruption has come from an external source such as a road being closed, you will need to check with your insurer to see what your policy covers, as the reliance on passing trade may not be enough to fulfil a claim.

Keeping business interruption at a minimum is key to maximising your profit in a Guest House, but understanding where you stand and what you can claim for is also extremely important. If you would like to get in touch to discuss anything further with our team please do not hesitate to get in touch.

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