Lives on the Line

When a guest checks into a hotel, there is a general expectation that the property will be clean and safe. Each year, however, guests’ lives are put at risk from natural and man-made disasters. If a life-threatening event such as a fire occurs, the potential exposure for the hotel and its insurers could be astronomical.

According to the National Fire Protection Association, each year, fires in hotels and motels cause over $84 million in property damage, over 120 injuries, and nine civilian deaths, despite accounting for only one percent of overall reported structure fires. These statistics are only yearly averages; a single incident could reach and exceed these numbers, especially if life-safety protocols are not implemented and prioritized. The 1980 MGM Grand fire in Las Vegas, for instance, killed 85 people, injured over 1,000 more, and resulted in estimated damages that exceeded $1 billion.

These high-exposure incidents are of particular concern for hotel insurers, as most properties hold varying amounts of liability insurance. Even when the hotel is not responsible for the cause of the fire, liability may still attach. In 2006, a fire was intentionally set at the Mizpah Hotel in Reno, Nevada, killing 12 people and injuring 31. The arsonist was sentenced to 12 consecutive life prison terms, but the Mizpah Hotel was sued in civil court by the survivors, who argued that the hotel was responsible for the circumstances that led to the deadly blaze since the hotel had left replacement mattresses stacked in the hallway for several days. Despite the fire department being only 500 feet from the hotel with an impressive two-minute response time, the fire spread was enhanced by this additional fuel load, directly impacting the time that residents had to escape. The hotel was insured and the matter settled for an undisclosed amount.

When there is a loss at a hotel, property owners and managers are likely targets under a premises liability theory. Such claims generally require proof of a duty, breach of that duty, causation, and damages. While the standard varies by jurisdiction, property owners have a non-delegable duty to use reasonable care to provide for the guest’s safety. Liability may attach for particular acts or omissions including:

• Permitting the existence of a fire hazard.

• Failure to provide timely warning of fire.

• Failure to promptly call the fire department.

• Failure to keep fire from spreading.

• Failure to maintain adequate fire escapes or other viable paths of egress.

This duty of reasonable care, however, may be satisfied by the hotel’s ability to demonstrate proactive steps taken to install, maintain, and appropriately repair life-safety systems for each property. Therefore, whether you are insuring, defending, or looking at subrogation potential at a hotel, the following five issues are essential to any analysis.

1: Maintain the Proper Life-Safety Systems

It is necessary that the hotel install and maintain the proper life-safety systems on the premises. At a minimum, these systems should meet local code requirements. Life-safety systems may include construction materials; detectors for fire, smoke, and/or carbon monoxide; an alarm system; automatic sprinklers; and an intercom system.

Once the proper systems are installed, maintenance becomes essential. The frequency for maintenance will be governed by code, the manufacturers’ recommendations, and the authority that has jurisdiction. Maintenance may include professional servicing, replacement of batteries, or even replacement of a system if defective or expired.

2. Perform Regular Inspections

Hotel operators must ensure, on a regular basis, that the required systems are operating as intended. While there is sometimes an expense associated with inspection and testing of life-safety systems, the expense is justified and necessary. Depending on the jurisdiction, if a property owner knew, or should have known, about a defective system, liability may attach. Testing is an investment in the property: While a tested sprinkler system will not lead to higher traveler reviews, a malfunction could cost the property millions of dollars.

Owners and operators should have a plan for testing their systems to ensure proper operation. This may be as easy as walking around and ensuring the emergency exits are not blocked and fire doors are not propped open, or testing evacuation or flood lights. However, some systems, such as fire-suppression systems, may require outside consultants.

3. Provide Staff Training

In the event of an emergency, hotel staff are in the best position to guide guests to safety. Emergency safety training should be a regular part of staff meetings. All hotel staff should be trained to spot and report issues promptly, evacuate guests, and handle minor issues that may arise. Staff should have familiarity with all life-safety equipment.

Training should also include what not to do. For example, in the event of a fully involved fire (i.e. one that cannot be extinguished with a fire extinguisher), staff should instead focus on safe evacuation of guests from the property.

Staff training should go beyond fire evacuations, too. The property may encounter a power outage, flooding, or wind damage that makes it impossible for guests or staff to safely remain on the property. Staff should be aware of how to respond to the disasters most likely to occur in the area.

4. Keep Sufficient Records

Hotel owners and operators must maintain records and maintenance schedules. At a minimum, these logs should track:

• Date and frequency of visual property inspections.

• Date alarms were tested and batteries changed.

• Date staff was trained, and the names of staff members who received the training.

• Sprinkler system testing dates.

• Alarm panel testing dates, and the date the alarm panel was updated.

These logs are in addition to other records required by law, such as OSHA records and any state or local record-keeping requirements.

Proper documentation will not only help owners and operators keep track of their system’s maintenance needs, but also provide evidence of their compliance with codes and their duty of reasonable care in the event of an incident.

5. Promptly Respond to a Loss

Owners and operators should have an emergency response plan in place in the event of a loss. This may include immediate responses, such as finding alternative accommodations for guests for the night, but also proactive defense plans, including:

• Immediately notifying insurance carriers of the loss.

• Securing the loss location from intruders or looters.

• Identifying all potentially interested parties should there be an investigation.

• Retaining an appropriate defense team.

If the hotel is still able to operate after a fire or other loss, any joint investigation for defense or subrogation purposes should happen in a timely manner to minimize business interruption and potential spoliation.

Ultimately, no property is immune from a loss. However, taking proactive steps can help ensure that the property operates in a way that will minimize life-safety liability.