The hospitality industry includes such disparate operations as
hotel, gaming and restaurant companies, but some risks don't recognize these distinctions. Brand management--protecting a
company's good name in the eyes of consumers and investors--is on
risk managers' menus when they check in at their offices every
morning, encompassing everything from vicarious liability claims to
emergency preparedness, cyberrisk and terrorism; and they still need
time to buy CAT cover.
Company Name Location CRO
Boyd Gaming Corp. Las Vegas, Nev. Stan Smith, VP, Risk
Management/Security; Bob
Berglund, VP, Employee
Benefits and Insurance
Brinker Dallas, Texas Kim Sanders, Director
International Inc. of Risk Management
Harrah's Las Vegas, Nev. Lance Ewing, VP, Risk
Entertainment Inc. Management
Hilton Hotels Beverly Hills, W. David Little, VP,
Corp. Calif. Risk Management
Marriott Bethesda, Md Bradley Wood, SVP, Risk
International Inc. Management
MGM Mirage Las Vegas, Nev. Paula Gentile, SVP,
General Counsel
Papa John's Louisville, Ky. Georgianna Stump, Senior
International Inc. Director, Risk Management
Penn National Wyomissing, Pa. Robert Ippolito, VP,
Gaming Inc. Secretary & Treasurer,
Jacques Arragon,
Director, Risk Management
Wyndham Worldwide Parsippany, N.J. James Iervolino, VP,
Corp. Risk Management
Yum! Brands Inc. Louisville, Ky. Connie Hayes, Assistant
Treasurer, Risk
Management
2006 Total
Company Name CFO Revenue
Boyd Gaming Corp. Paul Chakmak, EVP, $2.27 billion
Treasurer
Brinker Charles M. Sonsteby, $4.15 billion
International Inc. EVP
Harrah's Jonathan S. Halkyard, $9.67 billion
Entertainment Inc. SVP, Treasurer
Hilton Hotels Robert M. La Forgia, $8.16 billion
Corp. EVP
Marriott Arne M. Sorenson, EVP, $12.16 billion
International Inc. President, Continental
European Lodging
MGM Mirage James J. Murren, $7.17 billion
President, Treasurer,
Director
Papa John's J. David Flanery, SVP, $1.00 billion
International Inc. Treasurer
Penn National William J. Clifford, $2.24 billion
Gaming Inc. SVP, Finance
Wyndham Worldwide Virginia M. Wilson, EVP $3.84 billion
Corp.
Yum! Brands Inc. Richard T Carucci $9.56 billion
No. of Primary
Company Name Employees Broker
Boyd Gaming Corp. 23,400 Aon, Kaercher
Insurance
Brinker 120,000 Withheld
International Inc.
Harrah's 85,000 Beecher Carlson,
Entertainment Inc. Willis
Hilton Hotels 61,000 Aon, Marsh,
Corp. PartnerSource
Marriott 143,000 Beecher Carlson,
International Inc. Marsh
MGM Mirage 66,500 Aon, Willis
Papa John's 13,194 Wachovia
International Inc. Insurance
Services
Penn National 13,910 Marsh
Gaming Inc.
Wyndham Worldwide 30,000 Aon, Regions
Corp. Insurance
Yum! Brands Inc. 272,000 Lockton
Company Name Captives
Boyd Gaming Corp. Constellation Insurance
Co. (Hawaii)
Brinker Brinker Insurance Co. Ltd.
International Inc. (Bermuda)
Harrah's Aster Insurance Ltd.
Entertainment Inc. (Bermuda), Red Oak Ltd.
(Barbados), Romulus Risk
& Insurance Co. (Nevada)
Hilton Hotels Hilton Insurance Corp.
Corp. (Vermont)
Marriott C.L. Int'l Insurance Co. Ltd.
International Inc. (Bermuda), F.L. Insurance
Corp. (Hawaii), Marquis
Insurance Corp. (Hawaii)
MGM Mirage MGMM Insurance
(Vermont), M3 Nevada
(Nevada)
Papa John's RSC Services Ltd
International Inc. (Bermuda)(in runoff)
Penn National No
Gaming Inc.
Wyndham Worldwide No
Corp.
Yum! Brands Inc. Glenharney Insurance Co.
(Vermont)
Company Name Risk Exposure:
Boyd Gaming Corp. The development and renovation projects that might
face significant risks inherent in construction;
extensive governmental gaming regulation and
taxation policies; certain facilities located in
areas that experience extreme weather conditions;
energy price increases.
Brinker Seasonal fluctuations in the company's business;
International Inc. changes in consumer tastes and behaviors and
demographic trends; availability of employees;
adverse weather conditions; future commodity
prices, fuel and utility costs and availability;
consumer perception of food safety; health
epidemics and pandemics; governmental regulations;
inflation.
Harrah's Financial risk exposure associated with increased
Entertainment Inc. taxation on gaming revenues; the severity of
aviation accident risk and the resulting p.r.
risk exposure; the global risk issue of a
pandemic.
Hilton Hotels Changing mixed-use dynamic of the industry; the
Corp. availability and cost of property-catastrophe
coverage; the recent acquisition of Hilton
International and the resulting increased
international exposure in 73 countries; corporate
move from an ownership business model to a
management and franchise model, and resulting
limitations and changes to its insurance program.
Marriott International, national and regional economic and
International Inc. geopolitical conditions; the impact of war, actual
or threatened terrorist activity and heightened
travel security measures; travelers' fears of
exposure to contagious diseases, such as Avian Flu
and Severe Acute Respiratory Syndrome; natural
disasters, such as earthquakes, tsunamis and
hurricanes; taxes and government regulations;
organized labor activities.
MGM Mirage Extensive federal, state and local laws,
regulations and ordinances; certain properties
located in areas that may be subject to extreme
weather conditions, including, but not limited
to, hurricanes; increases in energy costs; the
company's susceptibility to global geopolitical
events, such as terrorist attacks or acts of war
or hostility.
Papa John's Auto (delivery driver exposure) that can affect
International Inc. the company's liability and workers' comp
programs.
Penn National Most of the company's properties are on the water,
Gaming Inc. including three on the Gulf Coast, and the company
is coming off a significant Katrina claim; flood
exposure in other parts of the country where the
company has barges or boats on water, such as on
the Mississippi River and Ohio River.
Wyndham Worldwide Vicarious liability claims and other risks
Corp. associated with being a year-old public company;
brand management
Yum! Brands Inc. Employee and customer injury claims; property
damage claims to restaurants; reputational brand
risk (anything that would damage the reputation
of the brands in the eyes of consumers, such as
adverse media attention and product contamination
issues).
Company Name Risk Strategies:
Boyd Gaming Corp. The company maintains insurance that might cover
some of the costs incurred as a result of extreme
weather conditions, but the coverage is subject
to deductibles and limits on maximum benefits. No
assurance can be made that the company would be
able to fully collect, if at all, on any claims
resulting from extreme weather conditions. The
company provides indemnity insurance for directors
and officers to be indemnified or insured against
liability or loss under certain circumstances.
Brinker The company is self-insured for certain losses
International Inc. related to health, general liability and workers'
compensation. The company also purchases insurance
for losses that exceed the self-insurance per
occurrence or aggregate retention.
Harrah's The company employs a government relations
Entertainment Inc. department and a legal department to assure
the company is in compliance. The company also
mitigates its aviation risk through risk control
and safety and has in place an aviation disaster
plan. The company has new jets and diligent
charter aircraft screening and protocols in place.
For global pandemic risk, the company uses risk
control, trains its personnel and works with each
department of health in the locations where it
operates.
Hilton Hotels The company has re-evaluated and restructured
Corp. how it places its complex insurance program
for property. With international exposures,
the company is in the process of evaluating its
disparate insurance programs and deciding which
to combine and which to change, as well as
collecting underwriting information for each
international property.
Marriott The company has property and liability insurance
International Inc. policies with coverage features and insured limits
that it believes customary. Certain types of
losses, generally catastrophes such as
earthquakes, hurricanes and floods or terrorist
acts, might be uninsurable or too expensive to
justify insuring against. The company had $184
million in self-insurance reserves in 2006 and
self-insures for certain levels of property,
liability, workers' compensation and employee
medical coverage.
MGM Mirage The company maintains both property and business
interruption insurance coverage for certain
extreme weather conditions, though such coverage
is subject to deductibles and limits on maximum
benefits, including limitation on the coverage
period for business interruption. The company
cannot say that it will be able to fully insure
such losses or fully collect, if at all, on claims
resulting from such extreme weather conditions.
The company is also self-insured for most health-
care benefits for its nonunion employees.
Papa John's The company mandates that every driver must pass
International Inc. the MVR criteria, and the company collects proof
of insurance on drivers for underlying coverage.
The company also purchases a $30 million umbrella
excess above $1 million. It uses a statutory
workers' comp program and takes the first $250,000
retention of each claim.
Penn National The company mitigates its property risk through
Gaming Inc. insurance. With its operation in Bay St. Louis,
Miss., the company moved its property on land,
and it is looking at moving other casinos inland
as well.
Wyndham Worldwide The company maintains a strong reputation and
Corp. deep relationships with the insurance industry,
especially with the London market. With the
creation of Wyndham Worldwide, the company has
integrated into one unified global property
portfolio to save millions in premiums. In its
latest property renewal, the company used brokers
on a fee-neutral basis to build its primary and
excess layers. It also has coverage for vicarious
liability and sets up standards with franchisees
and tracks their compliance with insurance
requirements.
Yum! Brands Inc. The company champions a strong safety culture and
builds an appreciation throughout the
organization, top to bottom, of what could affect
the company adversely. The company also uses a
robust field-based loss-control department as its
legs and arms in the field. The company self-
insures for a majority of its exposures, and
transfers risk as well.
COMPILED BY MATTHEW BRODSKY FROM THE FOLLOWING SOURCES:
HOOVER'S, RISK AND INSURANCE MANAGEMENT SOCIETY INC.
DATABASES; COMPANY FILINGS AND REPRESENTATIVES.
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