In the News II

Quote: Mission146

I mean, the entire insurance industry is predicated upon they take in more money than claims cost them to pay out. That should really tell you everything you need to know about specialty policies. It adds cost to the end user (the guests of the hotel) with no added value for them.

A company based on taking in more thss as n they pay out? Alert the media!

Quote: AZDuffman

A company based on taking in more thss as n they pay out? Alert the media!

You've done a good job of taking the small post and missing the entire point of everything else that I said. Why shouldn't business disruption be part of property insurance anyway? The property that they are insuring is the same as where the business would be disrupted, isn't it?

***Before you respond, I mean in the case of a hotel or physical retailer.

Quote: Mission146

You've done a good job of taking the small post and missing the entire point of everything else that I said. Why shouldn't business disruption be part of property insurance anyway? The property that they are insuring is the same as where the business would be disrupted, isn't it?

***Before you respond, I mean in the case of a hotel or physical retailer.

Insuring property and insuring business disruption are two different things. Two different underwritings. Two different reasons to buy and needs.

Insuring property started as "fire insurance" but has grown to most damage with certain limits. This is required when property is financed and almost always a good thing to have even if it is paid off. It usually has some kind of liability component as well.

Business disruption insurance is a different part of risk management. If you are very tight on cash flow it is going to be a good thing to have. If you can cover your payments and minimal operating expenses then you might not need it. That it exists shows lots of people either need it or choose it as a part of their risk management plan.

Quote: Mission146

It adds cost to the end user (the guests of the hotel) with no added value for them.

That isn't true. Let suppose you have a prepaid reservation 2 months out. A hurricane hits and the hotel has no cash flow for a month. If it is not strong enough financially to survive that loss of income they go bankrupt without insurance. If they go bankrupt then you lose all of your prepaid reservation as the prepaid reservations are not a priority claim.

Quote: kenarman

That isn't true. Let suppose you have a prepaid reservation 2 months out. A hurricane hits and the hotel has no cash flow for a month. If it is not strong enough financially to survive that loss of income they go bankrupt without insurance. If they go bankrupt then you lose all of your prepaid reservation as the prepaid reservations are not a priority claim.

If you prepaid with a credit card you will be reimbursed by the credit card company.

Brick and mortar retailers are experiencing inventory issues.

Inventory is disappearing.


The way it could play out is retailers' stock prices get hammered before the shareholders realize what happened.

Then society overcompensates.

Then the numbers look better after several quarters or years, etc.


So although many look very bearish, it could be an opportunity, but not just yet.

I'm looking at TGT around $115.50 or so, so still a ways to go.

Quote: AZDuffman

Insuring property and insuring business disruption are two different things. Two different underwritings. Two different reasons to buy and needs.

Insuring property started as "fire insurance" but has grown to most damage with certain limits. This is required when property is financed and almost always a good thing to have even if it is paid off. It usually has some kind of liability component as well.

Business disruption insurance is a different part of risk management. If you are very tight on cash flow it is going to be a good thing to have. If you can cover your payments and minimal operating expenses then you might not need it. That it exists shows lots of people either need it or choose it as a part of their risk management plan.

Right. They could be one thing; that's my entire point. It could be wrapped up into property insurance. I'm waiting for the reason that it could not be. I'm not arguing that it doesn't exist or is a different underwriting.

Besides, it's not really a point of major consequence. If you're a hotel in Maui and you can't weather the fire of losing a few weeks of revenues, then you're not running a hotel in Maui terribly well. The more important point is that there is no world where guests should have to pay for rooms that the hotel is denying them, regardless of whether or not the reservation is non-cancellable and they shouldn't need any kind of insurance to protect against trips that a business entity is effectuating the cancellation of.

In this situation, if the hotel were to cancel the guest rooms, then the hotel should also be expected to refund the flights. Obviously, the hotel guests will have already booked travel and the airlines certainly aren't going to refund them because the hotel says they can't have their rooms.

It's almost as if you don't care about the common consumer at all even though you are the common consumer.

Quote: kenarman

That isn't true. Let suppose you have a prepaid reservation 2 months out. A hurricane hits and the hotel has no cash flow for a month. If it is not strong enough financially to survive that loss of income they go bankrupt without insurance. If they go bankrupt then you lose all of your prepaid reservation as the prepaid reservations are not a priority claim.

If being deprived of cash for a month is enough to effectuate the bankruptcy of a hotel, then they really had no business running a hotel anyway. The hotels I managed could have lost their best month of the year and would still show an operating profit and probably a net profit.

This is all spun off from my introductory point, and the more important one, that the guests should not be charged for rooms that the hotel would now be saying they cannot have. That seems like such a basic concept. If you pay for something and the business entity does not provide you with that thing, then you get your money back. I don't know when this became such a foreign concept to people.

Quote: Mission146

Right. They could be one thing; that's my entire point. It could be wrapped up into property insurance. I'm waiting for the reason that it could not be. I'm not arguing that it doesn't exist or is a different underwriting.

They possibly could, but it is like saying why is your homeowners and auto not one policy? Better to be able to shop for coverage individually.

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Besides, it's not really a point of major consequence. If you're a hotel in Maui and you can't weather the fire of losing a few weeks of revenues, then you're not running a hotel in Maui terribly well.

?? A total revenue loss will put the squeeze on fast. Debt service alone will be huge. When you do finally come back online it is another few weeks at least until you get your revenue flow back to normal. It is kind of like getting sick for a few months like I did last year. It took a year for me to really get things back to normal.

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The more important point is that there is no world where guests should have to pay for rooms that the hotel is denying them, regardless of whether or not the reservation is non-cancellable and they shouldn't need any kind of insurance to protect against trips that a business entity is effectuating the cancellation of.

Correct, they should refund. But that is part of why you have the insurance as this money might have already been used for operating costs, it is not escrowed.

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In this situation, if the hotel were to cancel the guest rooms, then the hotel should also be expected to refund the flights. Obviously, the hotel guests will have already booked travel and the airlines certainly aren't going to refund them because the hotel says they can't have their rooms.

Nope, the flight is not the hotel's concern. The guest should but a refundable fare or else have travel interruption insurance.

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It's almost as if you don't care about the common consumer at all even though you are the common consumer.

How?

Quote: AZDuffman

They possibly could, but it is like saying why is your homeowners and auto not one policy? Better to be able to shop for coverage individually.

That's not comparable, in my opinion. In the case of a hotel, business operations and the physical property are part and parcel because the physical property literally IS the source of all business operations. That's what a hotel does.

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?? A total revenue loss will put the squeeze on fast. Debt service alone will be huge. When you do finally come back online it is another few weeks at least until you get your revenue flow back to normal. It is kind of like getting sick for a few months like I did last year. It took a year for me to really get things back to normal.

I'm not saying total revenue loss for a month won't hurt you, but it shouldn't end you. If it does end you, then all the better, as the hotel will presumably be purchased by a competent operator. We're not talking about some newly-constructed roadside motel that was erected in an area where transient work suddenly tried up; we're talking about a tourist destination.

The remainder of the quote was what I said. I assume you meant to add something else and misclicked?