Hotel Asset Management
Hotel Asset Management is the fiduciary process of providing a hotel owner with the information and tools to make informed decisions.
Unlike other “bricks-and-mortar” asset classes, hotels are specialist “going-concern” properties that require active management in order to generate optimal returns. To this effect, owners often employ the services of specialist operators, along with recognised brands and reservation networks, to manage their investments, at a fee. Whilst this potentially conflicting relationship is legally governed by various agreement structures, the day-to-day management of the differing objectives of asset owners and hotel operating/brand companies benefits from the services of a specialist hotel asset manager to keep both parties aligned and focussed.
The Asset Manager ensures that the hotel is managed and maintained as an investment in accordance with ownership’s expectations regarding maintenance, financial returns, value creation and risk mitigation.
Why Hotel Asset Management?
The separation of ownership and management of accommodation properties has reduced owners’ ability to provide effective input and oversight needed to ensure the optimisation of their real estate investments. Can you really afford to spend the time and effort to monitor and control the efficiency of your appointed hotel operator?
- Is the hotel achieving its full market potential?
- Is the property adequately maintained?
- Are all costs and expenditures controlled and justified?
- Are budgets met? If yes, was the budget too light; if not, why not?
- Is new capital investment requirement? When, and how much?
- Does the operator always have your best interest in mind? How do you resolve a potential conflict?
Why not employ independent experts to monitor, review, inform, advise, guide and (re)direct both you and the operator as and when required? AHS Advisory can provide you with detailed hands-on operational control, as well as long-term strategic investment management support. In addition, we act as an experienced intermediary with the operator, providing effective communication, trouble-shooting and conflict management.
Why AHS Advisory?
AHS Advisory are specialists in the hospitality sector with proven credentials in hotel development and operations. We bring practical hands-on hotel experience to bear, combined with many years of dealing with developers, owners and operators. We can put ourselves in the shoes of the operator, but with the interest of the owner in mind. We understand what motivates both parties and can thus provide an unbiased and impartial view on operations, profitability, cash flow and return on investment.
Both principals of AHS Advisory are members of the Asian chapter of the Hospitality Asset Managers Association (HAMA).
Following the development or acquisition of your hotel, you want to ensure it provides you with the optimum return on your investment. We work with our clients to identify and understand their key objectives and concerns, then tailor our asset management approach to focus on what is important to them. Important factors to understand are the owner’s investment objectives, return expectations, investment horizon, risk profile and intended exit strategy.
Asset Management Plan
Based on an initial strategic review of the property and the market it operates in, we prepare an Asset Management Plan, driven by an understanding of the owner’s objectives for the asset and the specific needs of the property as identified during the strategic review. During the initial strategic review we undertake the following tasks:
- a comprehensive physical property review;
- a detailed market review and competition benchmarking;
- a review of historic operational and financial performance; and
- a review of operator contracts, agreements and compensation.
From the information gathered we set key objectives and targets, to be communicated to and achieved in collaboration with the operator.
Following the initial Strategic Review and preparation of the Asset Management Plan, we implement a performance monitoring and reporting regime, based on regular property visits and interaction with the operator. This will involve, as a minimum:
- market supply and demand updates;
- competitive benchmarking analysis;
- performance analysis against budget and prior years;
- review of sales and marketing activities;
- revenue analysis and cost control;
- review of operator charges, contract compliance and compensation;
- review of guest satisfaction surveys; and
- FF&E control.
Planning & Budgeting
Short- and long-term planning includes both operational and capital budgeting. This includes:
- monthly forecast, annual business plan and budget reviews;
- asset register maintenance; and
- CapEx planning.
Projects & Strategic Decisions
In addition to regular performance monitoring, various projects and other ad-hoc issues will emerge that require active involvement around:
- staffing and human capital;
- systems and technology;
- sustainability and energy management;
- repairs and preventative maintenance;
- property refurbishments and renovations;
- third party contracts and agreements; and
- compliance and legal issues.
AHS Advisory is able to assist with many of these. In addition, we know the best people in the industry to provide expert advice and can provide the engagement and supervision of third party specialists as required.
One of the key advantages of engaging AHS Advisory as your independent Hotel Asset Manager is the elimination of fixed overhead cost in return for scalable services as and when you need them most.
The initial preparation of a Strategic Review and Asset Management Plan is the most elaborate component of our hotel asset management engagement, charged at a fixed fee based on the expected detail and amount of time required.
Thereafter, we would adhere to a set schedule of tasks, meetings and reports for an agreed monthly retainer fee.
Any additional analyses, projects, reports and other activities that may be required will be charged at agreed hourly and daily rates.