Hotel Online Special Report

Attention Hotels - An Ounce of
Prevention is Worth a
Pound of Cure
This article is from the upcoming Hospitality Upgrade Spring 2002 issue. For more technology articles please visit our Web site. To receive the upcoming issue of Hospitality Upgrade magazine register on the Web site or e-mail .
 Spring 2002

By Elizabeth Lauer Ivey

The hospitality industry is acutely aware that security is a top concern for todayís traveling public.  Likewise, Americans have a heightened awareness of fraud in the aftermath of Sept. 11 ďcharity scamsĒ and the current Enron debacle.  Risk management, loss recovery and fraud prevention are all byproducts of increased security that global businesses are focusing on today.  Hotels and hospitality companies should be no exception.

Ironically, hotels have attempted to limit their liability by not providing a higher level of security.  Removing video cameras from parking garages and guest corridors is one strange measure hotels have taken in recent years but face it, those court cases were won in a very different era.  Now more than ever, hospitality companies are likely to be held accountable for the well-being of their guests.  In addition to the safekeeping of their guests and guestsí personal effects, hotels should be doing everything possible to protect the sensitive data that they are capturing through improved CRM.  Legal precedent is changing, along with our inherent desire for security and hotels should go above and beyond their competitors to sell peace of mind.  In return for taking better care, hotels should benefit from better internal control procedures, measurable payback and considerable goodwill. 

Motive and Opportunity

According to a 1999 study published by Arthur Anderson, U.S. businesses lose approximately $400 billion per year due to traditional fraud. Unfortunately, the hospitality industry is not immune from this phenomenon.  The motive?  Letís face it, when economic times get tough, people steal things.  The opportunity?  Guests and employees alike will steal from hotels if they see glaring loopholes in accounting procedures, inventory management or storage methods for supplies and valuables.  In some cases, hotel guests donít steal directly from the hotel, but accuse hotel staff of stealing or losing a very valuable belonging.  Guest motives for stealing might include their belief that they have paid an exorbitant room rate, received poor service or they are under the false impression that hotels have lots of money to lose because they witness wasteful practices.  The opportunity is uncovered and further justified by the less ethical who suspect that hotels have little means of defending itself.  It is a well known fact that hotels pay substantial amounts of fraudulent claims on goodwill and fear of negative publicity. 

Laptops with Legs

In-room guest safes have become the norm in most branded properties, but have you ever peered into an unoccupied hotel meeting room to see half a dozen laptop computers sitting unattended?   Schemes to steal computers, principally laptops, account for $1 billion in losses each year. Hotels are a prime target for laptop theft rings.  If a guest has their laptop stolen, itís not just the replacement cost of the computer the hotel has to worry about.  The guest may seek compensation for their lost documents, data and productivity.  One can imagine how this gets pricey, but even $3,000 for a top of the line computer is a small price when compared to the potential lost business from a company or group that has had such an experience. 
Laptop attendants or PC Banks are portable, multi-user security devices that can be purchased by a prudent hotel and then rented to a conference group by the day.  Itís the same principle that security deposit boxes brought the industry in the early part of last century, ďwe have it, we offered it, you refused it; therefore, weíre not responsible.Ē  These PC Banks are available from Elsafe. 

Tackling Tracking

In this day and age there are few valid excuses for misplacing guestís tradeshow booths, briefcases, skis, wedding favors or ground shipments that arrive in advance.  Invest in a package tracking software system and start accounting for shipping and receiving revenues collected from guests.  Revenues, yes, revenues!  Hotels can and should charge for this service; it is perfectly acceptable.  Some meeting planners have avoided convention center drayage fees by shipping palates to the receiving dock of the host hotel, or worse the front desk.   Yet, hotels can bill groups and individual guests for shipping, receiving and storage only if there is a highly accurate means of reporting these charges.  A clear record of these services makes it difficult for charges to be disputed and a clear record can only be provided by an automated system. 

Shipping and receiving systems provide better internal controls.  They also deter theft, because the last person to sign for a parcel or shipment is responsible for its whereabouts.  Guest parcels can be distinguished from hotel supply deliveries, but are scanned into the same tracking system upon arrival.  Automatic notification is available and accountability is assured until the intended recipient digitally signs as proof of receipt.  If parcels are missing, employees should know exactly where in the delivery process they disappeared.  A guest cannot claim non-delivery of a valuable item when this proof is so readily available.  This accountability is not limited to parcels and it can be easily applied to flower deliveries, concert tickets and gift baskets. 

Check out TrackIT from Utah-based RHR Systems (, developed exclusively for the hospitality industry.  Trackpad is available from A2B Tracking Solutions (, based in Boston.  These shipping, receiving and tracking systems not only cut costs associated with lost item claims and rising insurance premiums, but also they can help manage an income stream or profit center for the hotel.  These systems are extremely affordable.  A basic system for a mid-size hotel begins at less than $5,000 (cheaper than a set of heirloom golf clubs) and installation can often be completed in a single day.  Meeting planners and guests will pay nominal fees for this level of insurance and security, and they will continue to generate business for hotels that demonstrate a higher level of competence and control. 

Undermining Data

Data security is another issue to which the hospitality industry has not given nearly enough attention.  The industry has become obsessed with gathering customer data, yet hotels and hospitality companies have hardly accounted for sizable sales of network security devices and services designed to protect that data.  Proactively managing potential security risks on your network begins with a vulnerability assessment, which is the process of measuring and prioritizing these risks.  There are a number of companies that will analyze your network (at no cost) to expose any vulnerability and suggest necessary steps to take in making your network safe and secure.   Phone calls to a few of these companies revealed that the hospitality industry hasnít placed much importance on this matter, despite the fact that hotels have been entrusted with credit card numbers, address information, stay patterns and even the number of martinis consumed in the lounge by a frequent and discreet guest.   Managers who would never consider sharing their hotelís performance data would be appalled to learn how easy it would be for an adolescent hacker to obtain such secrets.  A major security breach will cost an unsuspecting hotel a great deal of money, not to mention severe damage to the publicís trust.   Pay a visit to for more information. 

Take Heart

Hoteliers should investigate the benefits of having an automatic external defibrillator (AED) onsite for a positive image with guests, as well as employees.  The typical business traveler fits very closely with the greatest ďat riskĒ profile for cardiac arrest.  In addition, theyíre away from home, under greater stress, not getting a lot of exercise and have just left a plane and airport, both of which likely have AEDs.  Whether or not a liability exists for not having an AED is something each hotel should discuss with their risk management group, but in the last five years several large payments were made to settle suits against Lufthansa, United Airlines and Busch Gardens for not having defibrillators.  See for more information on AEDs. 

Despite apparent risk-mitigating opportunities, many hoteliers tend to wait for a substantial loss or high-profile lawsuit involving another hotel before they go shopping or consider their own investment.  This article has presented some economical products and services designed to reduce a hotelís liability in an increasing litigious and security-obsessed society.   Sure, money is tight for any hotel these days, but a pound of prevention is still cheaper than an ounce of cure.  Hotels that put off these investments run the risk of continued monetary loss, as well as damage to reputation and public perception.  Ironically, as demand for similar risk-reducing products and services increases, costs for such equipment and services may actually increase in the future and latecomers could pay more than forward adopters.  If you havenít read it already, see The Price of Change by Dan Phillips in Hospitality Upgrade, Spring 2002 issue. 

Elizabeth Lauer Ivey is a senior technology strategist with HVS Technology Strategies, a division of HVS International. HVS International is the largest hospitality-specific consulting firm offering services to hotel owners, operators and financial institutions. She can be reached at (303) 443-3933 or
Geneva Rinehart
Associate Editor
Hospitality Upgrade magazine 
and the Hospitality website

Also See: HOSTEC - EURHOTEC 2002 - Room for Improvement / Christel Dietzsch / Hospitality Upgrade Magazine / Feb 2002 
Technology and the Human Touch / Dan Phillips / Hospitality Upgrade Magazine / Spring 2002
Wireless Technology:  Where We Have Been, Where Are we Going? / Geneva Rinehart / Hospitality Upgrade Magazine / Spring 2002
Effective Customer Relationship Management (CRM) Implementations / John Schweisberger and Amitava Chatterjee, CHTP / Hospitality Upgrade Magazine / Fall 2001 
What's Up With Call Accounting Systems (CAS) / Dan Phillips / Hospitality Upgrade Magazine / Fall 2001 
Technology Dilemmas: What have IT investments done for you lately? / Elizabeth Lauer / Hospitality Upgrade Magazine / Summer 2001 
Full Circle from Centralized to ASP - The Resurrection of Old Themes and a Payment Solution / Gary Eng / Hospitality Upgrade Magazine / Summer 2001 
A High Roller in the Game of System Integration / Elizabeth Lauer / Hospitality Upgrade Magazine / Spring 2001 
CAVEAT EMPTOR! Simple Steps to Selecting an E-procurement Solution / Mark Haley / Hospitality Upgrade Magazine / Spring 2001 
Your Bartender is Jessie James and He Needs to Pay for College / Beverly McCay / Hospitality Upgrade Magazine / Fall 2000 
Choosing a Reservation Representation Company / John Burns / Hospitality Upgrade Magazine / Spring 2001 
Understanding and Maximizing a Hotelís Electronic Distribution Options / by John Burns / Hospitality Upgrade Magazine / Fall 2000 
The Future of Electronic Payments - From Paper to Plastic and Beyond / J. David Oder /  Hospitality Upgrade Magazine / Summer 2000
Timeshare Technology Steps Up / by Elizabeth Lauer / Hospitality Upgrade Magazine / July 2000 
Biometric Payment: The New Age of Currency / by Geneva Rinehart / Hospitality Upgrade Magazine / Mar 2000 

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