Employee Theft, Fraud and How Hotels Can Manage the Risks

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The United States economy remains fragile after the worst economic period since the Great Depression. The hospitality industry has been hit particularly hard, experiencing decreasing occupancy and steeply declining REVPAR. Capital projects are being deferred, staffing levels and staff hours reduced - and employees are being asked to forgo pay raises while their workloads are increasing.

These factors are creating “the perfect storm” with continuing industry layoffs. Hotel employees are apprehensive and concerned about their job security. This uncertainty, coupled with personal financial strains is resulting in the prevalence of numerous fraud triangles.

This article details the most common liabilities with this issue for the hospitality industry and how to best address your risk exposure – and to understand the laws and federal penalties for those engaging in this type of activities.

Employees encountering these mounting pressures and perhaps believing that management does not care about them may rationalize their illegal behavior. There has been a sharp uptick recently in employee fraud and theft using different methods of theft, so it’s imperative for employers to identify the risks and implement appropriate mechanisms to protect guests and the organization.

This article's author, Jim Stover, is a veteran hospitality loss control expert who was formerly the Vice President of Loss Prevention for Bristol Hotels & Resorts. A principal in Gallagher's Loss Prevention Practice Group, he also manages loss control for Gallagher’s Hospitality Niche.

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