Mulberry Secures Significant Savings for a £440m Hilton Hotel portfolio

It is a little known fact that most major hotel operators do not typically own the hotel asset they operate from. Instead they provide a management service for the owner under an Owner/Operator Agreement, and it is the hotel owner who has overriding control of the hotel’s asset.

 

When it came to purchasing a portfolio of 16 Hilton Hotels with an insured value in excess of £440 million, RBS selected our expert services to undertake the due diligence process, reviewing the insurance provisions and Owner/Operator Agreements.

Normally, Hilton Hotels are insured under their Global programme and therefore incur a policy excess of £500,000 on each claim submitted to insurers. Our specialist expertise within real estate insurance enabled us to provide RBS with a more streamlined insurance proposition, negotiating the removal of the insurance arrangements from the Hilton Global programme to dramatically reduce the policy excess by 99% to just £5,000.

This extensive portfolio of 16 Hilton Hotels was later sold to a longstanding Mulberry Insurance client, where we again reviewed the insurance arrangements to ensure full compliance with our client’s banking requirements, lease and operational agreements.

 

Our continued due diligence uncovered a potential 15% underinsurance and helped our client avoid any losses that may have resulted when making a claim.

Our on-going management of the £440 million Hilton portfolio has seen our specialist team work with appointed loss adjusters to successfully manage a number of significant claims over the years including a recent complex £700,000 loss. We have provided the Owners with the expert advice and guidance to help them present their claims to insurers, ensuring nothing is omitted or unnecessarily submitted, always working to get the best possible outcome for our client.

 

Part of the Owner/Operator Agreement between Hilton and its hotel owners is the Brand Standard requirement, which prevents hotels from replacing items on a like-for-like basis in the event of a claim; instead hotel owners are required to meet the current Brand Standard specifications that Hilton have in place at the time a claim is made.

Our experts identified this as a potential underinsurance risk, where hotels were required to meet this new Brand Standard but the current insurance arrangement did not provide insurance cover for any increased claim costs. We dealt with the issue immediately and negotiated a bespoke cover extension with Insurers to provide an automatic uplift to accommodate any additional costs incurred by Hilton’s Brand Standards agreement, preventing any loss to the hotel owner when making a claim.

 

Our continual due diligence and management of Hilton’s substantial portfolio has allowed us to identify significant savings for our client and efficiently lower insurance risks, while safeguarding the protection of their assets.