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Industry risk report: hospitality/gaming.

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

 2006 Total
Company Name CFO Revenue

Boyd Gaming Corp. Paul Chakmak, EVP, $2.27 billion

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,

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

Yum! Brands Inc. Richard T Carucci $9.56 billion

 No. of Primary
Company Name Employees Broker

Boyd Gaming Corp. 23,400 Aon, Kaercher

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

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

Papa John's RSC Services Ltd
International Inc. (Bermuda)(in runoff)

Penn National No
Gaming Inc.

Wyndham Worldwide No

Yum! Brands Inc. Glenharney Insurance Co.

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;

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

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

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

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

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

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.

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Article Details
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Author:Brodsky, Matthew
Publication:Risk & Insurance
Date:Jul 1, 2007
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