In certain cases, courts can even levy large judgments against hotel operators who rent rooms infested with bed bugs. In 2003, a federal appellate court awarded $372,000 in
punitive damages, roughly 37 times the compensatory award in the case, to a couple bitten by bed bugs while staying at a chronically infested Motel 6 in Chicago.
Hotel owners and operators have faced periodic reports of bed bugs for decades, but a newfound public fascination with the problem, combined with the proliferation of websites dedicated to documenting bed bug outbreaks, has created a frenzy of media activity never before seen. Indeed, bed bug stories have been reported in the New York Times, Washington Post, Wall Street Journal, and many other local television and print outlets across the country. Stoking the traditional media’s interest in bed bugs is a rash of new online forums where travelers post the unsettling details of encounters with the pests.
Much of the coverage seems sensational and overblown, but property owners and third party operators in the hospitality industry have to face the reality that the process of eliminating bed bugs from hotel rooms can be quite expensive and can lead to litigation and costly settlements. Additionally, reports of infestation on online travel sites like TripAdvisor and bed bug reporting sites like bedbugregistry.com and bedbugreports.com can cause significant reputational harm and loss of business.
The good news for hospitality companies is that robust risk management practices, and the appropriate insurance and risk financing programs, can significantly mitigate the financial impact bed bugs can have on a hotel organization.
Establishing formal risk management protocols around bed bugs is an important first step in minimizing the cost of infestation. Proactive steps for hotel organizations include creating a formal program to train housekeeping staff on spotting bed bugs, creating a policy on how to handle outbreaks or complaints and implementing regular pest control inspections.
“Bed bugs are on our list of emerging issues facing the insurance industry, not only for hotels, but in the retail, apartment, and residential healthcare sectors,” noted Brian Gerritsen, Senior Director of Hospitality Business at Fireman’s Fund Insurance Company. “The recent increase in bed bug related claims has prompted us to become more proactive about the issue with our insurance customers.” Mr. Gerritsen’s team recently released an industry alert recommending that hotel operators take several actions to prevent potential infestations in guest rooms including:
• Chemically treating mattresses and sealing them in plastic
• Washing/drying bedding and towels regularly and daily if possible
• Vacuuming cracks, crevices and other hiding places and sealing openings permanently so the bugs don’t have a place to hide
• Having regular inspections and extermination services done by a qualified pest control contractor
• Training and educating housekeeping employees to recognize the presence of bed bugs and immediately report any activity to the appropriate personnel