For Gulf Coast businesses, claims process is just beginning

|

When the Deepwater Horizon spill's final impact on the Gulf Coast travel industry is tallied, claims and compensation could become as complicated an issue as plugging the well and skimming the sheen.

It's premature to project the eventual total reimbursements for business lost by the myriad travel-dependent companies on the Gulf Coast, since many have not yet filed.

Between May 3 and July 14, BP wrote 58,000 checks totaling $183 million, according to its website, and these payouts covered all manner of claims, not just travel-related.

More than 110,000 claims had been filed as of mid-July, but more than 45,000 claims are sidelined, awaiting documentation.

Floridians filed nearly 30,000 claims for property damage and lost wages and were paid $31.7 million through July 13, according to BP. In Mississippi, $15.6 million has been paid on more than 11,370 claims.

Palm Beach County on Florida's east coast, which has not seen any oil on its beaches, spent about $7,000 to collect sediment samples and print signs warning beachgoers not to pick up tar balls, an expense the county plans to recover from BP.

"Most of our clients are just starting the claims process, although two smaller-chain hotel companies already have filed claims," said Glenn Pomerantz, national director of insurance claim services for New York-based BDO Consulting, whose clients include large and small hotel chains.

The Gulf Coast does not have many large-chain properties, Pomerantz said. Most beachfront properties are mom-and-pops, bed-and-breakfasts or small-chain hotels.

Currently, some hotels that could qualify for reimbursement due to loss of business are occupied by BP adjusters and relief workers, "so the impact on occupancy is not quite as bad as it could be or has been, and these owners will probably file later," according to Pomerantz.

"Claims will be coming in hot and heavy in August and September," he predicted.

Many hotel owners and retailers in areas not directly affected by the spill have lost revenue because of consumer misperceptions that beaches there are covered in oil. This will no doubt lead to claims in the future, which will be handled by Kenneth Feinberg, the independent administrator of the $20 billion Gulf Coast escrow fund set up to provide fast, fair claims processing.

"Feinberg will exercise discretion in these cases," Pomerantz said. "For example, a beach either has damage or not. Hotels don't own the beaches, but a hotel owner whose revenues are down this summer compared with past seasons can make a case for compensation."

Another potential expense are guarantees at hundreds of Gulf Coast properties that are offering clients refunds if the beaches are soiled by oil or closed by the state.

Hilton Worldwide's Beach Satisfaction Guarantee program, similar to policies at several large chains, enables guests to cancel without penalty and receive a full refund.

"At this time we have not seen a large number of requests for refunds, as many of our hotels have not been affected by the oil spill," said Lisa Cole, Hilton's director of communications for the Southeast U.S.

Likewise, Orbitz expanded its Open Beach Guarantee beyond July 31, and it now covers all affected Gulf Coast states where hotels opted into the program.

Hotels.com's program now includes 48 Florida properties, is good for travel through Sept. 30 and lets guests cancel with a full refund until 5 p.m. on arrival day.

Marriott's oil-free guarantee offers a 50% room rate credit for each day the beach is officially closed and a full refund to guests who cancel before their arrival.

Arne Sorenson, Marriott president and COO, said it was a bit early to know what impact the oil spill was having on business.

"We have generally seen very little in terms of cancellations," Sorenson said, though he noted a decline in new bookings.

This report appeared in the July 19 issue of Travel Weekly.

Comments
JDS Travel News JDS Viewpoints JDS Africa/MI