In its tourism report for 2025, Statistics SA (StatsSA) & National Department of tourism reports that South Africa remains a top destination recording 10.498 million international tourists visiting the country, a 17.6% increase over 2024 and far exceeding 2018 levels.
A labour-intensive sector, with a supply chain that links across sectors, the tourism and hospitality industry is regarded as a modern-day engine of growth, contributing 8.8% to the GDP growth in 2024 and supports 1.68 million jobs.
Unforeseen incidents
Although these statistics bode well for the hospitality industry, there are a number of pitfalls in running a hospitality business. These include loss of income due to fire, theft, cybercrime, public and third-party liability, business interruption, and natural catastrophes, to name but a few.
An example is that of a restaurant’s kitchen that was ruined by fire, forcing the business to close its doors. No income was received during the repair period, but overheads such as rent, electricity, water, salaries and payments to suppliers remained due at the end of each month.
An incident like this has the potential to ruin a business. Fortunately for the restaurant owner, the loss of income was covered under the business interruption extension of his policy.
Minimum protection
In addition to comprehensive cover, the minimum insurance protection any hospitality business should consider relates to:
- all property, such as contents, equipment, improvements, electronic data processing equipment, outdoor property and stock;
- business interruption, to protect against financial loss should the business be faced with a setback following a loss, and
- machinery breakdown, to cover the repairs or replacement of business machinery following a breakdown of/or material damage to the unit
“It is important to also protect against general liabilities that come with the territory of hospitality or entertainment. One of the most critical areas of liability involves food poisoning, should your operation supply catering, to cover the risk of incidents such as a client getting sick or injured while in your establishment,” says Juan Fourie, head of the Hospitality Division at Santam.
Expert advice
The hospitality industry is diverse, which means that business owners in this industry are exposed to different forms of risk. As a result, even with the best risk management policies in place, one can never foresee all the types of claims that could occur. It is, therefore, important to understand the unique exposures a client might face, customise insurance solutions to match the client’s needs and put risk mitigation plans in place to protect the client’s assets, reputation and livelihood.
“Be sure to advise clients on all changes to product offerings, but also that you take them through the fine print to ensure that they understand the exclusions in their policy. More often than not we find that they discover this a little too late. The most important part of any policy is not what is covered, but what is excluded. Typically, insurance policy documents only list the exclusions in the fine print. This is one of the areas where the value of having access to a good intermediary with experience and expert knowledge of this industry becomes critical. Helping policyholders review, as well as update their insurance regularly, is one of the simplest ways to mitigate risk and to protect their venture from potentially devastating financial losses,” concludes Fourie.
Speak to your Relationship Manager for more information on the Santam guesthouse and tourism insurance solutions or visit www.santam.co.za