European heatwaves cut hospitality sales and expose insurance protection gap

Padua, Italy. Europe’s fifth heatwave of the year has disrupted the traditional early evening aperitivo in Padua, with customers moving indoors for air conditioning and hospitality businesses reporting lower sales.

Hospitality businesses affected

For more than a century, cafes in Padua have welcomed customers for aperitivo between 6 p.m. and 7 p.m., encouraging outdoor socialising before dinner.

During the recent heatwave, many customers postponed the occasion until later in the evening, leaving terraces and outdoor seating areas unused, according to Federica Luni, president of hospitality association APPE Padova.

A survey of about 600 hospitality businesses in Padua and its province found that more than 80% reported turnover declines of around 20% during the heatwave.

“A 20% decline wipes out your margin,” Luni said.

Economic and insurance impact

Heatwaves are increasingly affecting Europe’s economy by reducing productivity, limiting consumer spending and increasing operating costs.

Moody’s estimates that European heatwaves last summer caused €43 billion ($50 billion) in lost economic output, while insured payouts totalled about €500 million.

Extreme heat often falls outside traditional business interruption insurance, creating a protection gap for companies whose losses result from operational disruption rather than property damage.

“Heat in itself is not a traditionally insured risk,” said Swenja Surminski, managing director for climate and sustainability at Marsh.

“Extreme heat rarely causes catastrophic physical damage the way a flood or a storm does, but the financial operational disruption that it triggers can be just as severe.”