HVS Monday Musings: Hotel Asset Management is Essential for an Unbiased Perspective

Similar to other types of real estate, a hotel asset’s performance should be measured on per square feet return on built-up areas to increase ROI. Asset managers work with owners to maximize the asset value and potential by optimizing operational efficiencies to deliver better ROI. As unbiased third-party subject matter experts, they evaluate the hotel operations objectively, pinpoint the key potential revenue opportunities and cost optimization areas, and work with the operations team to implement the suggested changes. An asset manager can also provide deep, insightful advice due to their extensive knowledge, bringing in benchmarking-relevant insights from learnings across various brands, geographies, and hotel positioning. Additionally, they challenge conventional business wisdom by developing products and services that can generate ancillary revenues using the same infrastructure, focusing on continuous improvement, and adding to the EBITDA leading to better valuations. External consultants work extensively across various industries to bring about a new perspective, unbiased insights, neutrality, and objectivity in business improvement or change management on a continuous or project basis.

Since there is always room for improvement, various tools are now available, including a one-time asset management review that gives hotel owners a comprehensive analysis of the performance of their hotel across departments by evaluating over 70+ matrices, including those for sales, marketing, revenue management, distribution, social media, account management, food & beverage sales, departmental costs, and many other areas, as well as providing recommendations for improvements. Any increase in EBITDA brought on by improving top-line performance and efficient cost management will increase flow-throughs and increase asset valuation by a multiple of 10 to 15, depending on the type and positioning of the hotel.

Asset managers can offer their services to the owner at every stage of the project's life cycle, from project planning to operator selection to pre- and post-opening. With a professional asset manager on board, you can anticipate incremental revenues and savings that will far outweigh the fee paid to an experienced asset manager.