’Jack of all trades, master of none’ is an English idiom which dates from Elizabethan times, when it was once used to describe Shakespeare. It is not a complement, so next time you’re looking for something flattering to say about your boss, don’t be tempted.

In the hotel sector, we have seen a growth in specialism which has only been to the good of everyone involved with, and staying at, a property. Rather than an exhausted owner/operator running around making the beds, managing the bookings and ensuring that the shower works, the separation of ownership from operations has meant that myriad areas of expertise have sprung up and, when they work together, an increase in value is assured.

One growth area has been asset management, where on-the-ground knowledge is combined with experience to make sure owner, brand and all points in between are aligned and function at their best.

And, as with all good growth areas, there are those who can smell an opportunity and want to get involved. In recent years we have seen a number of brokerage houses and consulting companies who have decided to add asset management to their offerings. We won’t name names, but you can whisper into my ear at the next conference.

There are several reasons for this. In the case of the brokers, they are aware that their time is passing. The residential property market has long worked out that agents can easily be bypassed and fees saved. The internet has provided the chance for forums displaying all the property you could possibly want, from multiple brokers, with no need for special relationships.

We’re not quite there in hotels, traditional selling is still very much the norm, but the brokers need to show that they’re more than just fees, they can look after your property even after you’ve bought it, through their asset-management division. It sounds appealing, why not have them take care of the asset management too?

This is growing in hotels, but is huge already in facilities management. So far ahead is the facilities sector that in 2019 Brookfield Business Partners sold BGIS, its leading global provider of facilities management services, to CCMP Capital Advisors, for approximately $1bn. One can quite see how it would be tempting to try and build up a similar operation in your hotels practice.

So far, so appealing. But as any large company will tell you, every department has their agenda and they may not all be pointing in the same direction. Where they are all focused is on collective profit, and that is not always to the benefit of the asset management business.

Asset management provides a good hedge against the ebbs and flows (and booms and total standstills) of buying and selling hotels. Good, solid income all the time. It’s very comforting in hard times. But in boom times, the allure of large fees is likely to draw greater attention. When you can get more money selling a hotel than just managing it, is the owner the one who is going to benefit? Or the agent? Where will the pressure be applied?

Decisions are based on the needs of the company with multiple interests in the property, not the owner, who has only one.

For asset management to work, it must be independent. The asset manager ensures that all parties work together and all parties have their interests served. A good asset manager must work across brands and across continents, so that the owner can be truly assured that the decisions made are based on market knowledge, not what’s good for the asset manager that day.

The asset manager must also be experienced. It is a specialised skill which must be built up over time, not something which can be done in a firm which has multiple tasks and roles and where consultants have their eyes on other jobs. A full review of a hotel is done on the ground, with an eye for detail and for what can be improved. Not from a distant office.

The slur may have been a low blow when aimed at Shakespeare, but in the hotel sector, particularly now, having enough knowledge to do an OK job across the whole property may seem appealing, but only a master can create that exceptional performance.

Alex Sogno
CEO & Senior Hotel Asset Manager
Global Asset Solutions

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