Some of the deadliest fires in U.S. history have occurred in hotels, placing the exposure front and center in the minds of hotel risk managers and shaping their crisis management response plans, experts say.

Disease outbreaks and natural catastrophes are also major crisis exposures for hotel risk managers. Regardless of the type of crisis, the safety of guests and employees takes precedence over property exposures, risk managers say.

"I think probably the biggest exposure is that we have guests with us 24 hours a day and we have them in their most vulnerable state" when they are asleep, said Mel Bangs, director of risk management for Irving, Texas-based Omni Hotels Corp. In an emergency, "it's a very important part of our job that we get the guests out and get them to safety."

Flee, don't fight, fire

Gretchen Langston, director of risk management for Greenwood, Colo.-based Xanterra Parks & Resorts, specifies in a crisis management white paper that a fire alarm should result in individuals evacuating the area of a fire rather than picking up a fire extinguisher and trying to battle the flames.

Risk managers, their brokers and insurers quickly cite hotel/motel fires as being among the deadliest fires in U.S. history.

In 1980, a fire ignited by an electrical ground fault at the MGM Grand Hotel and Casino in Las Vegas killed 85 people, injured 700 others and caused at least $30 million in damage, according to a Clark County, Nev., Fire Department report.

Six years later, three employees intentionally started a fire in the Hotel Dupont Plaza in Puerto Rico that killed 97 people and injured 140 others.

The deadliest hotel fire in U.S. history happened in 1946 in Atlanta, when 119 people died in a blaze of undetermined origin at the Winecoff Hotel, which had neither fire sprinklers nor an alarm system, according to the National Fire Protection Assn.

According to the NFPA, one of every 12 U.S. hotels reports a structure fire each year.

"The biggest fear people have is mass casualties," said Brian Ruane, executive vp, director of the real estate and hotel practice group of Willis Group Holdings Ltd. based in New York.

In January, a roof fire damaged the Monte Carlo in Las Vegas and caused a three-week shutdown of the hotel. There were no fatalities. In a U.S. Securities & Exchange Commission filing, owner MGM Mirage reported the fire insurance claim was $85 million: $49 million in business interruption and $36 million in property damage.

"Fire is an underwriter's nightmare," said Thomas Dondero, assistant vp and manager of excess and surplus risk control services for Westport Insurance Corp., an Andover, N.J., arm of Swiss Reinsurance Co. "That's the one we worry about the most."

Disease outbreaks are another key concern of hotel risk managers. Legionnaires' disease, a bacterial infection, got its name in 1976 when hundreds of people attending a Philadelphia convention of the American Legion at the Bellevue Stratford Hotel were infected.

Pandemic response

When Ms. Langston joined Xanterra a few years ago, her supervisor saw a news story on avian flu and asked her to develop a plan, but the organization had no disaster, recovery, business continuity or emergency preparedness plan, she told attendees of the Risk & Insurance Management Society Inc.'s 2008 annual conference in San Diego.

"Starting with avian flu is like starting at Z when we need to start at A," Ms. Langston said. That led to Xanterra's comprehensive white paper on how to manage a crisis, she said.

Omni's pandemic plan has different responses depending on when and where the Centers for Disease Control and Prevention reports human-to-human transmission, Ms. Bangs said.

Natural catastrophes are another major concern, said Ms. Bangs, who dealt with the aftermath of an Atlanta tornado this year (see story, page 12).

"If you're going to run a business like ours, you have to have a disaster plan," Ms. Bangs said.

Hotel risk managers' crisis management plans may differ depending on the disaster scenario, but the plans have certain core elements.

Having crisis management staff onsite at every hotel is critical to mitigating a crisis situation, risk managers say. "We have risk control managers at each of our properties and they are the lifeblood for my department," said Lance Ewing, vp-risk management at Harrah's Entertainment Inc. in Cordova, Tenn.

A central tenet of Xanterra's crisis management plan is choosing which employees will make crucial decisions ahead of a crisis and ensuring they keep that authority during the crisis.

For Ms. Langston, it was a lesson learned when she was a risk manager in Florida when Hurricanes Charley, Frances, Ivan and Jeanne slammed the state. During the aftermath, the previously identified decision-makers were cast aside and senior executives took over. "Talk about making the situation tough to manage," she said.

Xanterra's crisis management white paper clearly states that employees identified as key personnel in the crisis chain of command should be given complete authority within their designated duties. Getting senior executives to agree to that and reminding them of that agreement when an incident occurs helps ensure that the crisis management plan actually works. "It's been a tool that's been very effective for me," Ms. Langston said.

Disaster response can be tricky even if employees are designated ahead of time, Ms. Bangs said. "I think the biggest challenge in any crisis situation is whether the people in charge are going to keep their heads and execute the disaster plan," she said.

Core elements of a hotel crisis management plan outline individual employees' responsibilities, including who will knock on doors to rouse sleeping guests, make announcements and contact the authorities, Ms. Bangs said.

Omni hotels practice their response plans twice a year and critique them to make necessary adjustments. "I think that's the foundation of any disaster plan," Ms. Bangs said.

Practice is important, but risk managers need to understand they will not get everything right during a crisis, Mr. Ewing said.

"You will make mistakes in a crisis," Mr. Ewing said.