Asset Management 2020

By Robert Rauch, CEO RAR Hospitality

In the hospitality industry, asset management means dealing with all processes that allow hotel owners to optimize value, minimize costs and ensure the smooth running of hotel operations. A hotel manager and owner may not be completely aligned due to the inherent differences in goals and objectives. This is why an asset management perspective is needed to balance operating modalities with owner’s financial objectives.

Hotel asset managers represent the interests of hotel owners and assist them in various phases of an asset’s lifecycle. It is crucial that these individuals stay informed of the latest hospitality industry trends and uncover new opportunities for financial improvement.

Asset Managers identify any new source of potential revenue by analyzing both the operational side and the property side of the hotel. While some are paid third party asset managers and others are on the ownership side but have significant experience, their main duties include:

Operational Analysis & Review

• Determine areas where the property is performing well and areas that are in need of improvements
• Careful review of both income statement and balance sheet monthly. These reports help hotel owners in important decision-making regarding their financial performance, renovation requirements, staffing and more
• Detailed review of all management company or GM monthly reports

Property Repositioning Analysis

Asset managers must regularly conduct analyses to determine how the hotel is positioned in the market from the perspective of the customer and from the perspective of the hotel’s brand management. This is done with monthly or regular physical inspection of the property including front and back of house. In addition, a review of annual tax issues and opportunities is needed.

Areas where an asset manager can be helpful include a review of STR reports, guest service scores, channel management review and electronic documents including the hotel’s web site. There are times when a hotel must re-evaluate STR competitors and whether or not additional third-party reports are needed. Paying for reports that are not helpful is foolish but not paying for reports that are in fact helpful is just as bad or worse.

Risk Evaluation

Identifying key hotel risks and developing strategies to mitigate their effects is the job of the asset manager. Often times, there is no manager on duty at hotels or no plan in place for handling emergencies. Both of these conditions could present a challenge when an event takes place. These events can include medical emergencies, public disasters and active shooters as well as a plethora of unplanned events. A well-trained staff is paramount to success operationally and also helps avoid disasters.
Strategic Lodging Management

Asset managers must analyze both external factors and internal resources to work out a strategic plan for hotel development, renovation and operations. Unwavering adaptability to the market and to the evolution of the hospitality industry is needed to handle changes in overall hotel direction. Whether or not to brand an independent hotel, focusing in on renovation timing and providing assistance with the business plan are all elements of guiding a hotel.
Evaluating potential investment returns and conducting a detailed analysis of future market trends are both jobs that an asset manager should be able to accomplish. Reviewing loan documents, assuring there are controls on hotel cash and purchases are in the asset management wheelhouse.

Once an Asset Manager has completed a detailed analysis of the wider hotel business and evaluated all the revenue generated by the different departments (Rooms, Spa, Food and Beverage, etc.), they work on identifying ways to maximize revenue generated by the different services that the hotel offers to ensure the profitability of the hotel. Their productive management of capital expenditure, contracts and expenses will help your hotel stand out from the competition. For more information on asset management as a field, see the Hotel Asset Managers Association (HAMA) at http://www.hamagroup.org/.

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