Hospitality businesses don't need major events to face significant financial disruption. Sometimes, the trigger is far less dramatic, such as a property issue that limits booking capacity.
In 2025, 1 in 11 hospitality businesses in Australia shut down, the highest rate on record, while missed invoice payments increased by 47%.1 In many cases, the greatest financial threat is not the damage itself, but the downtime and loss of trading capacity that follow
Who is most exposed in hospitality?
While disruption can affect any hospitality business, some are more vulnerable than others.
- Restaurants, bars and cafes often operate with fixed seating and high daily turnover, making them particularly sensitive to even small disruptions.
- Businesses located in shared buildings or strata environments face added risk, where issues originating from neighbouring tenants can directly affect operations.
- Venues that rely heavily on customer experience and space availability are also exposed, as disruption can affect both revenue and reputation.
Case study: Business interruption following water damage
Incident
Business impact
What made the claim complex?
How Gallagher supported the client
Outcome
- Business Interruption: $389,079
- Contents: $32,116
- Stock: $16,222
- Additional Costs of Working: $16,890
- Claims Preparation Fees: $47,000
- TOTAL CLAIM: $501,307
Key takeaways for hospitality SMEs
The case highlights how quickly a minor issue can develop into a much larger business challenge.
Key takeaways include:
- The financial impact of a disruption often extends well beyond repair and rectification costs.
- Business interruption losses are often greater than expected without an accurate assessment.
- Risks from neighbouring tenants and shared buildings should be carefully considered.
- Claims may involve multiple stakeholders and require additional coordination.
Ask yourself:
- Do you have adequate business interruption cover and limits in place?
- Would you be able to quantify your losses in the event of a claim accurately?
- Do you have access to expert support to manage the claims process effectively?
The role of insurance and claims expertise
Business interruption insurance helps businesses manage the financial effects of unexpected disruptions by covering loss of income and certain ongoing costs during the period operations return to normal.
However, the effectiveness of that protection depends on how well the policy is structured. This includes considering exposures such as third-party disruption and other causes of interruption beyond direct property damage.
Specialist claims support can help businesses quantify losses accurately and achieve better recovery outcomes.
Speak to a Gallagher expert
Hospitality businesses invest heavily in their people, customer experience, reputation and physical assets. However, incidents such as property damage, customer injuries, food-related claims and employee accidents can affect day-to-day operations and create financial and operational challenges.
Effective risk management and claims support can help businesses respond with confidence, maintain service standards and minimise the impact of unexpected events. We work with hospitality businesses to assess exposures, manage claims and strengthen resilience, allowing them to stay focused on delivering exceptional customer experiences.
