When most people think of overhead hotel costs, they rarely consider how expensive water damage can be. While a burst pipe or a tap left running by a forgetful hotel guest can contribute to these costs, overhead fire sprinkler systems that misfire or run longer than they need to can be incredibly destructive.
In high-rise hotel buildings, the amount of water damage a fire sprinkler system can cause can cost the hotel hundreds of thousands of dollars.
While repairs and replacing furniture can be incredibly costly, the lost revenue due to forced cancellations and unplanned downtime can be so expensive that the hotel may struggle to recover.
To help you understand the financial risks of hotel water damage, we will explain how much it can cost and what you can do to mitigate the risk.
Unfortunately, there is no way to point to a specific dollar amount for hotel water damage. This is because the cost can vary greatly depending on the amount of damage the water caused, the size and location of the hotel, and how upscale the hotel is.
According to industry estimates, the average cost of repairing significant water damage in a hotel ranges between several thousand to several hundred thousand dollars.
Sprinkler systems that have misfired and run for too long are among the leading causes of large-scale water damage in hotels, especially within high-rise hotels.
As you may expect, the repairs and cleanup are the most expensive aspect of any water damage in a hotel. Pooled water can penetrate the walls, floors, and even the ceilings, damaging everything from electrical systems to furniture and carpets.
If the water is not cleaned up quickly and professionally, more long-term issues can develop from the remaining moisture, threatening the hotel’s sustainability, such as mold and mildew.
Not only is the actual cleanup and repair process expensive, but it can also be incredibly time-consuming. When rooms, or even entire floors, are closed due to water damage, the hotel can lose large amounts of revenue.
This financial cost can be catastrophic if the water damage impacts the entire hotel. Not only can water damage force a hotel property to lose revenue due to closing off bookings and canceling reservations, but larger hotels can also lose out on revenue that would otherwise be generated by the hotel’s restaurant and conference rooms.
Basically, the hotel cannot function to its full potential if it cannot operate at full capacity while the water damage is being addressed.
One of the more overlooked consequences of severe water damage in a hotel is the damage it can do to the hotel’s reputation amongst existing and prospective guests. If the hotel is forced to cancel reservations due to water damage cleanup efforts, the hotel’s reputation with these unsatisfied customers will be damaged.
Not only can the closure cost the hotel thousands in lost revenue opportunities and refunds, but the negative impression caused by the situation would also almost certainly damage the hotel’s reputation and prestige.
Negative reviews from angry guests impacted directly or indirectly by the water damage issue can quickly sink a hotel’s status.
While most hotels have insurance policies providing water damage coverage, these payouts can take time and rarely cover lost revenue and reputational damages. This type of coverage will likely cover the repairs rather than the indirect costs associated with the water damage.
It is also worth noting that most insurance policies will not fully cover the costs of cleanup, repairs, and replacements of unsalvageable items.
Instead, the hotel will be forced to absorb some of these costs as part of its annual operating expenses. This can force the hotel to raise prices and cut back on included services, which, again, can damage the hotel’s appeal to prospective customers.
Unfortunately, some hotels are forced to go out of business permanently as a result of a large-scale water leak or misfired sprinkler system. Without proper insurance coverage, the costs can be tremendous.
Even with insurance, there are no guarantees about how quickly the damages can be rectified. Water damage specialists can be in high demand, especially in the more populated areas where hotels are often found. Due to high demand, their availability is limited, and their labor and material costs are much higher.
Where other types of businesses can transition to online sales or even have a short-term move to a rented space, hotels face a unique challenge. The building is the business, so while it is closed due to cleanup and repair efforts, the business cannot generate any income. Given enough time, the hotel simply cannot recover.
Given the financial and practical consequences of water damage for hotels, it is well worth taking every precaution to reduce the risk. The following are just some of the ways hotels can protect themselves:
1. Regular Maintenance and Inspections
Having all plumbing, HVAC, and fire sprinkler systems professionally maintained and inspected reduces the risk of water damage.
2. Invest in Water-Resistant Materials and Furnishings
In the unfortunate event of significant water leaks, the damages can be limited by using high-quality materials and furnishings that offer some degree of water resistance. Water-resistant drywall, carpets, and room furnishings can go a long way.
3. Have Water Damage Insurance Coverage
Given how expensive water damage can be, it is always worth acquiring full coverage for any hotel. Look into your existing policy and update it if you are not covered. You can also read our guide for more information – What Type of Water Damage Insurance Coverage Do You Need?
4. Having Emergency Water Shut-Off Capabilities
All plumbing fixtures inside and outside rooms should have easily accessible shut-off valves. This can significantly reduce the damages that a leak could cause.
Fire sprinkler systems often need to be shut off manually by the fire department, even when they misfire. Even if a fire sprinkler system successfully puts out a fire within the hotel, the resulting water damage can also be very expensive.
Fortunately, a simple sprinkler shut-off tool can give maintenance personnel the ability to deactivate a fire sprinkler in seconds. This tool is called the Shutgun, and it is effective, affordable, and extremely easy to use.
Rather than wait 20 minutes while fire sprinklers rain down hundreds of gallons of water every minute, invest in a simple fire sprinkler head shut-off tool that could potentially save your hotel thousands upon thousands of dollars.
To learn more about the Shutgun and order this critical tool for your hotel’s maintenance personnel, simply click the link below: