By Justin Randall, HUB International
One popular approach among many hotel groups is to sponsor giveaway events and contests to attract more guests. They’re not alone. Auto dealers sponsor sweepstakes with a new car as the prize for some lucky winner. Since sports are always a draw, another example is when retailers offer cash back on purchases if a local team captures a championship.
It’s a strategy Wisconsin’s properties should think about as the rebuilding continues. The state continues to outpace the national average for travel spending compared to its 2019 performance, thanks to increased investment in the tourism economy. Even so, the recovery tends to be spotty, with the state’s resort destinations outpacing the business.
Promotional initiatives might help to expand their exposure, bring in new business and grow revenues. More than 90% of consumers remember businesses that give them promotional gifts and 75% will then remain loyal in the future.
Still, these efforts can be financially risky. A grand prize may involve the payout of a large sum of money, and redemptions can be higher than expected. There’s a negative financial impact if that occurs so it makes the case for over-redemption and prize indemnity insurance, which can minimize the risk.
Here’s what hotels need to know.
Understanding how prize indemnity insurance works
Prize indemnity insurance only covers what it is purchased to cover, typically a costly grand prize.
Go back to that auto dealer example. Say a car dealer hosts a promotion where the primary prize is a new car. Secondary prizes are items such as free oil changes and tire rotations. Prize indemnity insurance would cover the cost of a new car, but the dealer would cover the cost of the smaller prizes.
Additionally, prize indemnity insurance won’t cover any events or promotions where someone is guaranteed to win.
Cost of prize indemnity insurance depends on variables such as the amount of skill required to win, the amount of coverage being bought (the value of the prize), and the field of potential winners.
How to proceed
There are three fronts that an organization should consider when putting a contest in place:
About the Author:
Justin Randall leads the Hospitality & Real Estate Practice for global insurance brokerage Hub International’s Wisconsin Region, focusing on leading client strategy in those verticals. Justin’s 10 years of experience encompasses leading client engagements, advising clients on all aspects of insurance, risk management and overall enterprise growth. Justin works with several different franchises including clients with more than nearly $2B in revenues. Justin is an active member of the Wisconsin Restaurant Association as well as a participant in the American Hotel & Lodging Association. Mr. Randall holds a Bacheler’s Degree in Business from Edgewood College in Madison, WI.
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