While the focus in hospitality is always on customer experience, the reliance on equipment and machinery can often be forgotten as playing a vital role. When in excellent working condition, they ensure a smooth-running operation. But when things break down, not only can they cost a lot to repair, but it disrupts the business revenue, customer experience and can lead to high unforeseen costs.
Machinery breakdown insurance is more than protection for your equipment, it’s protection for your business. But, unfortunately, its value is often only realised after the fact, and by that time it’s too late to prevent business losses all around.
What’s really at risk?
Experience is everything. A great ambience, timely and quality service, and comfort will have a significant impact on customer satisfaction, loyalty, and revenue.
But, imagine running a restaurant without a combi oven, trying to check-in or manage guests at your hotel without your computer, or even something as simple as trying to create the right atmosphere in your pub with a broken audio system. These are just a few nightmare scenarios that can ruin a customer’s experience and can even prevent you from retaining that customer in the future.
Of course, the worst-case scenario is complete closure which is a distinct possibility with essential machinery and equipment failures. And in the hospitality industry, there are a lot of moving parts that can go wrong.
Air-conditioning, POS/cash registers, refrigerators, and other electrical equipment can break down anytime. Plus, if you fail to follow their periodic maintenance schedules, the chances of equipment failure increase. And that puts your business at serious risk.
The cost of equipment breakdowns in hospitality
This theoretical talk is all good and well, but let’s look at some real costs and scenarios that businesses have had to endure without the correct hospitality insurance.
When a fully booked out hotel’s main boiler became damaged and affected hot water to 92 rooms it had a huge impact on operations. Replacements were needed but these were only available with a 7-week lead time. It was a severe disruption that also came with a high price tag.
Because the hotel purchased breakdown cover, they were able to purchase a slightly larger off the shelf system as the insurer recognised the business interruption loss was going to be far greater resulting in a return to normal operations within 10 days.
Without breakdown and resultant loss of income cover, the hotel would have suffered a loss of $107,140
● Business disruption amounting to: $18,044
● A settlement amount of: $53,046
● Physical damage of: $36,050
But these types of incidents are more common than you think!
Another hotel suffered significant losses in its restaurant operations when essential kitchen equipment failed to function properly, and parts weren’t available due to the equipment’s age.
Without any breakdown insurance, the business incurred costs of $14,200 for repairs and further delays in reopening after the COVID-19 restrictions. So, on top of the immediate repair costs, they suffered additional business interruption losses and couldn’t capitalise on its reopening strategy to help recover.
But, it’s not just hotels at risk, damage to a POS system cost a cafe more than $24,000 to replace. A restaurant’s air-conditioning compressors cost the business more than $51,000 to repair and implement a ‘quick-fix’ solution. And for an RSL Club, an electrical issue that fried their system ruined 19 pokies that were only a year old, and cost over $32,000 to replace.
What’s the solution? In addition to a rigorous maintenance schedule to mitigate the chances of a loss occurring, a tailored engineering breakdown policy will provide an additional layer of protection for your business, reducing the chances of downtime.
Find affordable machinery breakdown insurance with Quantaco
Equipment breakdown can happen at any time, no matter the age of the machinery, and as we’ve shown, it runs the risk of incurring significant expenses and losses. This can be avoided with industry-specific insurance helping to protect your assets and mitigate your risk.
At Quantaco we are insurance and risk experts that design a risk management plan specifically for your business. We’re transparent, deliver collaboratively, and at a lower cost. So, whether you’re running a hotel, a pub, a restaurant, or an association, you can get appropriate cover for your equipment at a cost that suits your budget.
We do this through a client-centric approach that ensures constant communication and visibility over your business’ interruption insurance policies. And this approach is paired with innovative and integrated technology to mitigate risks and minimise conditions where equipment breakdown can happen.
The result? Peace of mind that your business will not suffer significant financial losses when unforeseen breakdowns occur*. But more importantly, having an effective risk management strategy can prevent such occurrences and stress in the first place. This enables your business to give customers an experience that will keep them coming back to your brand.
*Subject to the terms and conditions of the policy.
To learn more about how we can help you with equipment and machinery breakdown insurance, get in touch here: https://www.www.quantaco.co/contact-us