While general real estate asset management has existed for decades, hotel asset management evolved as a specialization beginning in the early 1990s, and for good reason. To maximize hotel real estate value, owners need hotel asset managers qualified un-biased advocates with specific expertise in hotel operations, real estate and capital markets.
Interested in learning more about what makes hotel asset management different, and what differentiates it from real estate asset management? Read more about the differences here:
Reasons to Engage Hotel Asset Management:
- Hotel Real Estate is Unique – Hotel real estate prices its inventory daily. Length of stay for the entire industry is approximately 2 days, while most other real estate investment tenants are measured in years. As a result, the operational flex & flow is critical to enhancing the asset value, and it requires constant optimization in a rapidly changing competitive landscape. The performance of the asset relies on making the right short and long-term strategic decisions, ranging from daily rate setting and marketing tactics to decisions about branding and management contracts.
- Valuation Considerations – Hotel real estate value is a multiple of an asset’s operating performance, which carries a different risk profile relative to alternative real estate investments. Ownership’s strategies will have a meaningful impact on operational performance as well as exit cap rates/multiples, so it is crucial to leverage hotel advisor expertise when making operational and long-term encumbrance decisions.
- Operational Know How – Knowledge of industry trends, technology, distribution channels, contract compliance, labor efficiency developments, and operational best practices are just a few of the critical tools asset managers need to effectively collaborate with operators and drive profitability. Hotels are incredibly dynamic investments, so operational improvement is an ongoing process. It is important that ownership is equipped with the right knowledge to ensure asset outperformance.
- Misalignment – There is a misalignment of interests between the owner, brand and manager in that hotel operators and brands are compensated primarily on revenue, while owner’s returns are based on EBITDA. Not all revenue is created equal, so hotel owner’s need to collaborate with brands and managers to ensure day to day operating decisions are accretive to the bottom line for ownership, not just the top.
- Strategic Accountability – Hotel asset managers ensure owner strategies are translated and integrated into the operating team’s mantra. In a rapidly changing environment governed largely by guest-centric initiatives, constant reinforcement of owner’s investment strategy is necessary to execute the long-term strategy for the asset.
- Breadth and Depth – Hotel owners have an overwhelming amount of choice when it comes to branding and operational management. Without professional hotel asset management expertise, it would be nearly impossible to properly vet these choices. hotelAVE has hundreds of years of combined experience including direct oversight of every major brand, management company, and market in the Americas. This level of breadth and depth is necessary to determine the appropriate direction when it comes to the most important decisions and owner can make with their hotel.
- Relationships – At the end of the day, relationships matter. We have built strong working relationships with owners, brands, managers, and vendors alike over many years. Owners want to work with asset managers who can leverage their relationships on a daily basis to maximize value to our owner partners.