With summer wrapping up, I recently caught up with a mentee who shared his experience as a summer asset management intern.
During our conversation, he recounted his time sitting in on several monthly property P&L and business reviews, noting how the quality of these reviews varied significantly. Select words and phrases he used to describe the ineffective meetings included, “tedious,” “the team simply read off slides,” “(we) tried to guide them to conclusions but they couldn’t come up with the answer and required extensive follow-up.” In contrast, effective calls moved quickly, were informative and sparked creative discussions.
I explained that the most successful review calls are those where the team develops and tells a compelling story. It is not simply a reporting call. A good review establishes a setting with details on supply and demand dynamics or the current operating situation. Themes can be carried through both revenue generation and operational expenses. The plot develops as actual performance is compared against benchmarks like the budget or forecast. Variances introduce conflict, and resolution is achieved when the operational drivers of performance are clearly presented.
I shared with my mentee some tools for developing effective presentations and stories that I have found useful and observed in successful teams.
Use Analysis to Triangulate a Conclusion
Early in my career, a manager taught me to delve deeper into variance analysis. While preparing for a month-end P&L review, I presented significant monthly variances compared to the budget and last year. These were the metrics already populated in the reporting package and easily available to me.
My manager pushed me to compare these to last month, the prior forecast, underwriting, the trailing three-month trend and broader portfolio metrics. After looking at absolute variances, he had me analyze metrics on a per occupied room, per available room and percent of revenue basis.
With more than 30 calculations and researching the drivers of the variances, there was a wealth of data to process and showed me how much preparation needed to happen to anticipate nearly any question. Over time, I learned to focus on the most impactful metrics and recognize which numbers, while significant, were not crucial to understanding performance. This process allowed me to evaluate the existing operations and develop data-supported conclusions, identify insightful statistics and be prepared for discussions.
Report Up, Not Out
In effective reviews, teams go beyond merely reporting numbers from the P&L. The focus is on describing the operational results behind the data. Simply restating numbers and calculated variances is ineffective. Asset managers are more interested in the trends affecting operations and the details behind them, which are best communicated through calculations of operational drivers and short anecdotes, not just data points. Explaining the “what” and “why” something happened.
For example, what if rooms expenses are over budget in the summary P&L? Digging into the detailed schedule, we learn the culprit is housekeeping labor. The basic review would stop there. However, a deeper dive might reveal that a shift from extended-stay groups to one-night transient guests increased room cleanings and required more overtime hours at higher rates. This operational detail is the underlying story that explains the variance, providing a more complete picture.
Boldly Share the Most Important Takeaways
After collecting data, running analyses and developing relevant conclusions, it’s crucial to purposefully present the key takeaways. Reducing these findings to a bullet point on a recurring slide template diminishes their importance. Instead, creating a standalone slide with a table or chart and short bullets can communicate the results more effectively.
Using the housekeeping labor example, a simple bar chart comparing budgeted versus actual wages can quickly illustrate plan versus actual performance. Further breaking down the actual wages into normal and overtime categories can enhance the clarity of the analysis. Such visual aids convey complex information more efficiently than lengthy written descriptions.
I emphasized to my mentee, anecdotally there is a strong correlation between successful properties that consistently exceed expectations and the quality of their monthly reviews. The storytelling approach makes the presentations more engaging because it is easier to follow and facilitates strategic decision-making and continuous improvement through the identification of themes and key plot lines. These teams are able to build trust, communicate competence and continually improve, resulting in outperformance.
Darryl Law is an asset manager with a focus on operational and investment strategy for public REITs, private equity, special servicing, and management companies. His viewpoints have been developed over multiple cycles and coverage includes a wide range of property types, including select-service, resort, full-service, convention and lifestyle hotels located in suburban, destination and top 25 gateway markets.
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