Industry Update
Opinion Article28 August 2014

Selecting A Hotel Management Company: A Decision Worth Millions

By Todd Isenstadt and Hans Detlefsen

By Hans Detlefsen, Managing Director of HVS Global Hospitality Services

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Detlefsen

After accounting for differences in branding, location, property age and condition, market size, and property type, do different management companies still produce significantly different results? This article shows that the answer is: YES.

A really good hotel management company can deliver more profit per dollar of revenue generated by a hotel than a below-average management company. Hotel valuation depends substantially on the proven and potential net income a hotel property can produce. A really good management company helps to maximize net income and value for the owner. One of the most important ways they can do this is by controlling operating expenses at the hotel. Therefore, selecting a below-average management company versus a really good management company can mean millions of dollars of difference in value for an owner.

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Selecting A Hotel Management Company: A Decision Worth Millions

After accounting for differences in branding, location, property age and condition, market size, and property type, do different management companies still produce significantly different results? This article shows that the answer is: YES.
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Hans Detlefsen

Hans Detlefsen, MPP, MAI, is Managing Director of HVS Global Hospitality Services in Chicago, which is dedicated to objective and independent hotel appraisals and consulting. His clients include major hotel corporations, investment banks, lenders, equity investors, owners, operators, tourism agencies, nonprofit organizations, state and local governments, and private developers.

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