Untitled Document

July 24, 2001

Hotels often let guard down when budgets get cut Security's usually one of first areas to be slashed

By Gary Stoller

Budget cutbacks are reducing security at hotels, some security experts say.

Dan Wilson, president of Asset Protection Associates in Charlotte, N.C., says that in the last 6 months one of his hotel clients eliminated its security staff, another reduced its staff and a third eliminated its vehicle patrols. Three companies that own several properties eliminated employee background checks, he says.

"Yes, the cutbacks are tied to the economy," says Wilson, who estimates that his company works weekly with at least one hotel. He wouldn't divulge names of any hotels, including one major hotel client that hasn't cut back on security.

"Security is often looked at as one department that's strictly an overhead," says Larry Talley, a retired security consultant and former Days Inn vice president. "If it's doing its job, hotel management might not see the results. So security often suffers when cutbacks come down."

Ray Ellis Jr., a longtime consultant for the American Hotel & Lodging Association (AH&LA), says most hotels and motels don't even have a security budget, and many that do have traditionally reduced the budget when business is weak. "I'm sure budget cuts are happening throughout all departments at hotels right now," he says.

The veteran security consultant says, however, that many hoteliers realize that a security cut can backfire if an incident involving a guest occurs and a subsequent lawsuit is filed.

"A cutback will hit you in the end," he says. "You will end up with a case that will cost you 10 times more than what you saved."

Hotel officials wouldn't discuss security budgets, but some say they're not aware of any cutbacks.

"To my knowledge, there haven't been security cutbacks in the industry," says William McShane, security director for Manhattan East Suite Hotels and a member of the AH&LA's loss-prevention committee. "There's a realization that although room occupancies are down, our guests are a most valuable commodity."

Chad Callaghan, vice president of loss prevention for Marriott International, which consultants regard as a hotel security leader, says he "can't speak for the industry as a whole." Company spokesman Gordon Lambourne says Marriott is not downsizing its loss-prevention department and currently has an effective security program.

Last month, some top security managers for major chains, Ellis says, were unable to attend the AH&LA's Risk Management Committee meeting because of travel expense cutbacks.

Cutbacks also prevented some hotel officials from attending a security-related industry meeting in May, McShane says. Jimmy Chin, director of risk management for the Peninsula Group, confirms that travel budgets for security officials have been reduced, "preventing us from traveling to annual conferences and shows."

Wilson and Talley say security training is often eliminated or reduced when a security budget is slashed. That doesn't happen in New York, says the Manhattan-based Chin, because state law requires 24 hours of initial training and 8 hours of annual recurrent training for security officers.

Budget cuts also can affect security in other ways. A hotel might, for example, eliminate a midday shift by security personnel, so the property can be adequately staffed at night, Ellis says.

Another cutback strategy, says security expert Thom Davis of Hospitality Risk Controls, is to eliminate the jobs of some security officers and assign their duties to other hotel personnel.

Budget cuts can also prohibit purchase or repair of surveillance and other security equipment, says Talley, author of Are You Safe?

Talley, who has testified in numerous hotel security lawsuits, recalls a case brought by a woman who was raped at a major Atlanta hotel. The woman's lawyer successfully argued that a hotel security camera had been inoperative for 2 years because no money had been allocated to repair it.

In another court case, Talley says, a hotel official testified that additional funds were not allocated for security because the hotel was paying an insurance premium that would cover any incidents.

Jeff Newman, a Boston lawyer, says hotel security managers and insurance company risk managers have told him that "security is the first to be cut when a budget's tight."

Newman says one of his clients was awarded $ 600,000 after she was raped at a small Massachusetts hotel that didn't follow up on a request to spend more money on security staff and maintenance work. The woman's door lock didn't engage properly, and the rapist was able to enter her room, the lawyer says.

Atlanta-based lawyer Gilbert Deitch says his client was awarded $450,000 by a jury this year after she was struck on the head with a gun and two assailants attempted to rape her in a hotel parking lot in 1998. In a deposition, the hotel's security director admitted that he had requested more personnel and improved exterior lighting before the incident. His predecessor also said that he had requested more staff but was turned down for budget reasons.

Ed Watkins, editor of Lodging Hospitality magazine, says smaller budgets are now the norm.

"The prevailing strategy now is to cut out a lot of middle-management at hotel properties, particularly in large full-service hotels," he says. "That would probably affect security departments, too."

Davis, a consultant for the AH&LA who evaluates security at some hotels, says a few times a month hotels call him and say they want to scale down expenses but not lose their security coverage.

This year, some hotels asked him to temporarily postpone his security evaluations. "Some clients said they were down this quarter and asked us to come in the fall instead of the spring," Davis says.

Ellis says he hopes that hoteliers won't make major security cuts when budgets are tight.

"When the economy is bad, there will be an increase in crime, and a hotel should be more alert and aware," he says.