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In our most recent Insurance Gap Annual Report, we found that, despite lower inflation in recent years, underinsurance remains critically high across many industries. Across the locations we inspected, both building and content assets were overwhelmingly underinsured, at 87% and 83% respectively. This exposes business to severe financial vulnerability.

The risk is especially true for the hospitality industry in 2026. Our report found that this sector – covering hotels, resorts, and tourism – is on average 18% underinsured on their building assets. 

In the event of a total loss, this gap would mean that on average hospitality businesses are at risk of receiving roughly 80% of the rebuild cost of an equivalent facility. This shortfall could force a business to self-fund the remaining reinstatement costs – a shortfall that could cause major challenges for business operations.

Understanding the hospitality sector 

For the hospitality industry, there isn’t a one-size-fits-all approach when it comes to declaring asset values, as it is such a vast and complex sector. It spans luxury hotels, expansive holiday parks, bars and restaurants, adventure theme parks, and budget-friendly out of town hotels. 

Each of these sub-sectors operate on different logistics and accompanying assets. When updating insurance policies to cover these assets, missing the specific nuances of them means that costs can often be under estimated and become consequently underprotected. 

In this article, we will explore the four key factors to get declared values correct and ensure that a hospitality business is adequately insured and protected. 

1. Demarcation of overlooked assets 

One of the most common causes of friction in insurance claims is what constitutes the building, and what counts as contents. Getting this distinction correct to ensure all of your assets are properly insured is crucial. As a reminder: 

  • Buildings: typically fixed items permanently attached to the structure of the property. For hospitality, this would include en-suite bathrooms for guest rooms, kitchen extraction hoods in restaurants, integrated reception desks, and fitted bars.
  • Contents: loose items such as hotel beds, free-standing furniture, restaurant tables, bar stools, as well as operational supplies and equipment. 

Across the industry, it is easy to overlook the smaller, operational assets that form the backbone of hospitality. Many valuations focus on the larger structure or general furniture but miss the operational items that keep the business running:

  • Guest room supplies – linens, bathroom supplies, and in-room appliances such as kettles, trouser presses and hairdryers. 
  • Food and beverage equipment – tableware, glassware, bar utensils, and cooking utensils.
  • Housekeeping and maintenance – cleaning supplies and safety equipment, including fire alarms and smoke detectors.
  • Administration – staff uniforms, stationery, and reception desk computers.

While replacing a broken kettle or a dozen wine glasses is a smaller, necessary expense as and when needed, in the event of a total loss where they must be replaced all at once the total cost can be substantial. And this is the hidden cost that is often overlooked in internal estimates or incorrectly valued when buried under generic contents figures. 

To avoid these gaps, it’s essential to regularly reassess the most up-to-date replacement costs of your property and contents, and ensure that no assets are missed out from your declared values.

Misunderstood inventory assets

In high-end hospitality venues, some assets can be misunderstood. This is especially true for wet (beverages) and dry (food) stock. They may be covered under separate insurance policies, or sometimes forgotten altogether, making it very easy to overlook the material cost of replacing these all at once in the event of a loss.

For premium hotels or wine bars with substantial investments in high-end wines and spirits, accurately valuing these stock levels is crucial in preventing significant financial loss. Total loss or destruction of this stock during an insured event could lead to replacing tens of thousands of pounds worth of inventory.

Storage segregation is also often a requirement for certification and compliance in hospitality. But separating dry from wet goods can involve additional space, specialist racking, controlled drainage and sometimes distinct HVAC systems.

In reinstatement terms, this means more materials, more infrastructure and more complexity which needs to be considered in the reinstatement costs for the subject premises. 

2. Navigating complex ownerships

Within modern hospitality, there is often a complex relationship and structure between property owners, management companies, and operators, particularly for hotels and holiday parks. 

For example, hotel buildings are often owned by property investors or private equity firms. They will then appoint management companies or pay to use a brand’s franchise, such as the likes of Hilton and Premier Inn, to use its branding and booking systems. The hotel brand will pay to use the building space for their operations, with the investor or firm effectively acting as a landlord.

In this model, particularly where the building owners have constructed or fitted out a building to the operators specification, there is a danger of assuming the other party has insured a specific asset. For instance, where there is substantial IT infrastructure and cabling, if there is an issue with this, the operator and building owner may dispute who claims for the cost of the repairs. 

Ultimately, in the case of emergencies, those involved may find that assets are uninsured and not covered for payout, leaving them to pay expensive repair costs themselves. 

To avoid this risk, lease or management agreements ought to be carefully reviewed to see who is contractually responsible for insuring each asset type. 

Third-party occupiers

The same issue arises with agreements between third-party occupiers and franchises, for example:

  • High-end restaurants within a holiday park
  • Spas inside in hotels
  • Cafés operating on a theme park site

Often, the park or hotel may cover the initial build out of the space, but the third-party occupier will cover their own specialised contents used for business operations. Again, if the assets aren’t clearly demarcated or defined, they can end up uninsured. 

Independent insurance valuations can highlight any anomalies and ensure that coverage is evident and indisputable from the beginning. 

3. Site boundaries & shared spaces

Holiday parks, resorts, and theme parks face unique challenges around layouts and perimeters. Especially as they work with third-party operators occupying space on-site, there are often questions raised about who takes on the responsibility for underground services, lighting, and other outdoor elements that impact the fundamental operations of these businesses. 

Holiday parks also face ambiguity for any third-party owned lodges or caravans. Questions may be raised around the extent of the land boundaries for these guest accommodations, what assets these third-parties are responsible to cover, and whether the park owners insure the entire site and allocate costs back. 

These ambiguities can lead to delays in the event of a claim. Contracts and lease agreements usually outline these site boundaries and this can help define who is responsible for which assets when setting declared values. 

4. Higher values for listed buildings 

Many of the UK’s most iconic hospitality venues are listed; for example, The Savoy Hotel in London and Chatsworth House in Derbyshire. Grade I. II* and II listed buildings mean they are registered on the National Heritage List for England due to their historical and architectural significance. 

Listed status means that legal obligations are placed on the property owner regarding any alterations, repairs, or reconstructions. For example, listed building consent is required for any changes to the structure that could affect its character. Listing may cover both the exterior and the interior, and any object or structure fixed to the building. When they are authorised for alterations, these listed venues cannot be rebuilt with standard, modernised materials. 

Reinstating listed hotels and restaurants often requires specialist surveyors, subject matter expert architects, heritage consultants, traditional materials (such as lime, mortar, and hand-carved stone), and specialised labour. All of which cost much more than modern hospitality buildings. 

Declared values need to account for these aspects, as well as the extended time it takes for the various legal and regulatory hurdles that must be cleared before work can begin. This includes obtaining listed building consent and ensuring compliance with building regulations. 

Historic costs 

Reinstatement costs may be understated due to the gap between the original construction costs and the actual costs of rebuilding today.

In the event of total loss or a need to repair, this would typically cost much more in today’s economic climate. An accurate, up-to-date Reinstatement Cost Assessment (RCA) ensures that these modern costs are reflected in their insurance policy, and adequately covered.

These assessments are essential in securing appropriate insurance coverage. 

Final thoughts 

Underestimating reinstatement costs can be particularly devastating for businesses in the event of a total rebuild or costly repair.

For the hospitality industry, when daily operation depends on efficiency for optimal guest experiences, operating with an 18% insurance coverage gap is a huge risk. Addressing the considerations listed above can ensure business continuity within this sector. 

By accounting for operational contents that are otherwise missed, truly understanding responsibilities in complex ownership agreements, determining clear site boundaries, and factoring in the true, modern cost of construction for heritage and listed buildings, your business can operate with certainty. 

At Charterfields, we strongly encourage hospitality business owners and third-party operators to review their current declared values regularly and check that their assets are not at risk from incorrect or missing insurance coverage. A professional insurance valuation ensures coverage aligns with modern needs and regulations to avoid underinsurance gaps. 

To discuss any valuation requirements, please get in touch with the Charterfields team today.