What is hotel asset management?

Hotel asset management is the discipline of maximizing profitability of a hotel. Hotel owners, investors, or real estate investment trusts (REITs) often employ hotel asset managers or asset management firms to serve as the bridge between the ownership entity and the operational team on the ground. Since hotel owners might own multiple properties or even assets of different types, like apartment buildings or office buildings, it can be helpful to outsource hotel asset management to specialists in the field.

What does an asset manager do?

Asset managers help the hotel owners get the best return on their investment: by helping to streamline operations and increase profits, the value of the hotel increases, and, when the time is right, owners can sell the hotel for top dollar. A hotel asset manager’s two main goals are to increase the hotel’s value and to prepare the hotel for sale at the peak of its lifecycle.

The asset manager works to increase the hotel’s value by maximizing revenue and minimizing costs. To do this, the asset manager collaborates closely with operational departments, like housekeeping, revenue management, front office, F&B, sales, marketing, and finance. Since the asset manager has a bird’s eye view on the hotel’s operations, they can spot opportunities to achieve higher revenue or reduce costs. In addition, hotel asset managers bring a breadth of experience in the industry. Perhaps they previously worked as a department head or a consultant. This expertise enables them to coach the on-site team toward the hotel’s business goals.

In addition, an asset manager works throughout the hotel lifecycle, starting with pre-opening. Working closely with the owners or investors, an asset manager can help to mitigate risk ahead of entering a deal with a hotel operator. Once the hotel opens, or if the owners purchase a hotel that’s already open, the asset manager can jump right in and work on budgeting, streamlining processes, and increasing cash flow. When the hotel has been open for some time and reaches its revenue and profitability peak, the asset manager can assist in the sale process to ensure optimal return on investment for the owners.

What skills does a hotel asset manager need?

Much of the role of a hotel asset manager is similar to that of a consultant, so the skill sets are similar. Key skills include:

• Analytical skills: Since a hotel asset manager must glean business insights from financial statements, STR reports, budgets, and other documents, it’s necessary to bring advanced analytical skills to the table.

• Hospitality experience: Running a hotel is quite unlike running a retail store or a dry cleaning business. A deep understanding of the nuances of the hotel industry, with a sense for the guest experience, is crucial to success as an asset manager.

• Excellent communication: An asset manager works with many different stakeholders, from the hotel owner to front desk agents, and the ability to effectively communicate ideas through written and verbal communication – and at different levels of sophistication – is paramount. 

• Curiosity: When faced with challenges, the asset manager must dig to find answers and solutions, which requires constant questioning and persistence. Plus, the hospitality industry is constantly evolving, and the asset manager must stay curious about current trends and market dynamics. 

• Negotiation skills: In many instances, the asset manager acts as the mediator between the hotel owner and operator. If both parties don’t see eye to eye, the asset manager must flex their creativity and patience to come to a resolution. 

How does a hotel asset manager add value?

While the overarching goal of hotel asset management is to increase the value of the property, this value creation can be broken into three components: better communication, industry expertise, and qualitative growth.

Better communication is especially important for owners with large portfolios or investors who are less familiar with the hotel industry. Without an asset manager, there’s simply no way for owners to stay in tune with everything going on at the ground level. An asset manager can be the owner’s eyes and ears; if something happens that needs an ownership-level decision or assistance, then the asset manager will let the owner know. In addition, the asset manager can help facilitate communication between operational departments, like between revenue management and marketing, or between housekeeping and finance, for example.

Industry expertise is one of the most compelling reasons to leverage an asset manager, especially for owners who are new to the industry. In essence, you’re buying all the learnings the asset manager has absorbed throughout their career – and all the connections that come with it. It’s common for asset managers to refer candidates for key roles or have existing relationships with vendors. These relationships can save money, time, and hassle.

Qualitative growth is the RevPAR boosts, expense reductions, and guest review score increases that occur as a result of the asset manager’s work. These qualitative metrics flow down to EBITDA and the hotel’s market value, helping to increase return on investment when it’s time to sell.

Hotel asset management is an essential component of hotel operations, as it involves managing a real estate asset on behalf of hotel owners. A hotel asset management company provides asset management services to hotel owners, working closely with the hotel's management team and general manager to enhance the asset value and cash flow of the hotel property.

In the hotel industry, revenue management is a critical aspect of hotel asset management, as it involves forecasting and benchmarking against leading hotels and tracking key performance indicators (KPIs) to ensure maximum profitability. A hotel asset management company also plays a key role in capital expenditure planning, ensuring that the hotel real estate asset is properly maintained and enhanced over time.

Due diligence and valuation are also important parts of hospitality asset management, particularly during the pandemic. As the hotel business faces unprecedented challenges, it is important for hoteliers to partner with an asset management company with a proven track record of success.

Enhancing the guest experience is a top priority for hotel asset management, as guest satisfaction is essential for long-term success in the hotel industry. Brands such as Hyatt and Marriott International have entrusted their properties to leading asset management companies like HotelAVE, who have demonstrated expertise in all aspects of hotel asset management.

In New York, HotelAVE's approach to hotel asset management has proven successful, with a focus on driving revenue and enhancing asset value through strategic planning, forecasting, and benchmarking. By working closely with the hotel's management team and team members, HotelAVE has been able to deliver results that exceed expectations outlined in the hotel management agreement.

Hotel asset management is a critical function in the hospitality industry. By partnering with an experienced asset management company like HotelAVE, hotel owners can ensure their real estate asset is properly managed and enhanced over time, maximizing profitability and providing a superior guest experience.