The Rising Cost of Weather: What It Means For Accommodation Providers

Australia’s accommodation sector is facing a growing challenge: the increasing frequency and severity of extreme weather events. From cyclones and flooding to coastal erosion and bushfires, climate-driven events are putting pressure not only on physical assets but also on business resilience and insurance affordability.  

A recent article by the Early Warning Network, drawing on findings from Zurich’s Mandala Climate Risk Index, highlights that around half of Australia’s tourism-related assets are now at significant risk from severe weather. According to the Mandala analysis, Queensland is the most vulnerable state due to its coastal and natural tourism regions are particularly exposed 

For all types of accommodation providers, these trends have long-lasting implications for risk, operations, and insurance.  

The Growing Financial Impact on Accommodation Businesses  

There are two main ways severe weather affects accommodation providers: physical property damage and business interruption.  

Even if a business avoids damage directly, operators may still face indirect consequences:   

• Cancelled bookings 

• Road or airport closures  

• Reduced tourism confidence 

• Power, water, or communication outages  

• Temporary shutdowns for safety reasons    

Research cited in the article notes that tourism businesses in disaster-affected regions can experience an average 35% drop in revenue, reflecting how disruptive weather can be even without catastrophic damage.   

As the frequence and cost of natural hazards increase, insurers are witnessing more claims, in turn contributing to high premiums, stricter underwriting and, in some locations, reduced insurance availability.  

What This Means for Insurance  

Accommodation providers are considered higher-exposure risks, especially in coastal, regional, or forest-adjacent areas. As a result, insurers are increasing focus on:  

• Accurate building and contents valuations  

• Flood exposure and storm vulnerability  

• Construction standards and property maintenance  

• Business interruption exposures  

• Emergency response planning and mitigation efforts  

Understanding policy definitions is essential. Such as the difference between flood and stormwater, or when prevention of access applies. The right structure of cover can determine whether a business can recover quickly or face significant financial strain.   

Why Proactive Weather Insight Matters  

The Early Warning Network emphasises the value of proactive weather monitoring as a key tool for reducing risk. Real-time forecasting and alerting allow accommodation providers to:  

• Prepare property and staff before an event  

• Communicate early and clearly with guests  

• Implement emergency or evacuation procedures  

• Protect assets and reduce loss severity  

• Improve business continuity  

Insurers increasingly see active risk management, such as weather alerting systems, maintenance programs, and documented emergency plans, as a positive factor when assessing risk.  

How Accommodation Operators Can Build Resilience  

Here are practical steps accommodation providers can take to prepare for a shifting weather and insurance environment:  

Review insurance coverage regularly   

Ensure key areas are correctly structured:  

• Buildings and contents  

• Flood cover (with clear definitions)  

• Business interruption with adequate indemnity periods  

• Prevention of access  

• Utility outage  

• Liability exposures  

Update property valuations  

Construction and repair costs have risen significantly. Ensuring sums insured are accurate helps avoid underinsurance penalties.  

Maintain a documented weather response plan  

Including:  

• Severe storm procedures  

• Guest communication steps  

• Shutdown and evacuation plans  

• Staff responsibilities  

Strengthen property resilience  

Routine maintenance, clearing debris, improving drainage, reinforcing structures, and understanding site-specific vulnerabilities.  

Use real-time weather intelligence tools  

These systems allow operators to act early, reducing damage and supporting smoother claims processes.  

Supporting the Future of Australia’s Accommodation Industry  

As severe weather continues to reshape the operating environment, accommodation providers must navigate increasingly complex insurance considerations. Understanding how climate trends influence risk, cost, and insurability is essential for long-term sustainability.  

At Barrack Broking, we work closely with accommodation clients to assess exposures, structure tailored policies, and support proactive risk management. A well-prepared approach today can make a meaningful difference in protecting your property, your guests, and the future of your business.