Hotels Face Rising Wildfire Risk and Insurance Premiums

Wildfire risk is increasing for hotels across the U.S. and Europe, driven by more frequent and severe blazes. Europe has recently experienced three successive heatwaves, leaving land notably dry. While many resorts, ski areas, and national park lodges are designed close to nature, where wildfire risk is often highest, the impact extends further. Smoke and embers can travel with wind; for example, Canadian wildfire smoke recently affected cities across the U.S. Midwest, Great Lakes, and East Coast. Flames have also burned in Spain, Greece, and the UK, and over 10,000 tourists and residents were evacuated in southwestern France in recent weeks.

This increased exposure translates to lower occupancy, higher operational costs, and rising insurance bills for properties. The 2023 Maui wildfires, for instance, led to a 61% year-on-year reduction in tourism spending. Insurers are now underwriting based on a property's resilience, not just its location. Hospitality operators report average property insurance increases of 17% to 26%, with high-risk assets facing rises of 50% or more. Some insurers are withdrawing from certain markets entirely.

In response, the industry is implementing various preparedness measures. This includes traditional approaches such as vegetation management, creating defensible space, using resilient building materials, and developing emergency plans. Hotels are also coordinating more closely with insurers and first responders. New technologies are being adopted, such as automated external sprinkler defense systems designed to activate ahead of approaching embers. Major operators, including Hilton, Hyatt, IHG, and Marriott, have cited wildfire risk in their climate disclosures, noting potential capital damage, operational shutdowns, and lost franchise fees.

Ultimately, this means properties in or near affected zones are adapting their operations and physical structures to manage this growing environmental and financial risk.