Particularly since the Great Recession, the value of a strong hotel asset management team has become undeniable. In today’s world, where constant vigilance and expertise are required to optimize hotel profitability, having an experienced and qualified asset manager can mean the difference between achieving investment objectives or not. As you would with any decision surrounding your hotel investment, it is vital to select the appropriate asset management group to work with your property team.
The field of hotel asset management has historically comprised all manner of “experts”—from hoteliers who were largely focused and competent on operational issues (but perhaps less so on real estate investment, finance, strategy, etc.) to professionals focused on one aspect of the hospitality business, such as accounting, law, asset preservation and brokerage. Over the past decade or so, demand for comprehensive services designed specifically for ownership groups has increased, and the field of hotel asset management has grown and evolved into a dedicated profession all its own.
When selecting an asset manager, it’s important that owners choose a professional firm with the credentials, experiences and track record that suit their particular situation. The following checklist might be helpful in evaluating asset management companies and identifying those qualifications that are most important to your investment.
- Identify core business: Does the company have a clear focus on asset management or is it just one of several services offered? Probing to understand the mix of business and leading lines of service will help determine where expertise and company resources are focused. When discussing a firm’s asset management experience, ask how much is related to oversight of “owned” assets (internal company investments) vs. third-party assets (owned by external clients). The question is whether third-party assets will get the appropriate time and attention from a company that manages substantially more owned than third-party assets.
- Comprehensive asset management experience: There are many talented and tenured hospitality industry professionals with 25 to 30 years of experience. It is important to drill down in order to understand what that experience entailed. The ideal candidate will have a breadth of expertise across related disciplines and depth of experience as an asset manager, with a proven track record in applying knowledge to create value.
- Diversified experience: Having related brand and operator experience, knowledge and corporate relationships is very important. Diversity across many hotel brands and operators will allow for greater financial performance benchmarking and identification of best practices that can be brought to specific assignments.
- Can they relate?: Look for experience with similar locations, market dynamics, brand and management structure, as well as clients whose goals are similar to yours. Your asset manager needs to be able to relate not only to the brand, operator and market, but also to client needs, objectives, knowledge curve and ultimately financial goals.
- Consistency: Ask about the firm’s average length of engagement with clients. While it is not uncommon for the number of hotels to ebb and flow with economic cycles, a long tenure with clients speaks volumes to satisfaction and ability to achieve results.
- Identification vs. implementation: Remember that companies geared more toward traditional consulting (advisory, feasibility, appraisals) might not have the experience in actually implementing recommendations. The ability to identify opportunities must be coupled with a proven track record in collaborating with management to implement initiatives and critically evaluate on a continual basis.
- Asset management style: Armed with the authority of ownership, some asset managers try to dictate, rather than collaborate, with hotel management. Over time, the best results come when everyone is invested in the outcome.
- People: Look at the experience of individuals, but also the depth of the team. Consider the structure of the company (silo or cohesive?). No individual is singularly qualified to provide all of the skills and expertise required to effectively asset manage a hotel. Look for a company structure that provides strong asset managers backed by support of subject matter experts in all areas (accounting, taxes, risk, contract negotiation, capital planning, revenue management, food and beverage, sales and marketing, labor issues, etc.). Understand the structure of the team and how the individuals and offices work together to support client engagements.
You’ll know when it’s right
When selecting the appropriate asset management entity for your property or portfolio, take the time to research the company and potential team members. Only by checking their credentials and researching how they conduct their business on behalf of owners will you truly get a feel for which group is right for you.
The wrong decision could lead to disappointing bottom lines and frustrated operating teams, while an unbiased councilor who is focused solely on the investment goals will help strike the right balance for guests, employees and ownership.
Hopefully, a clear winner will emerge from the evaluation process. If not, owners should follow their instincts on which group feels right, both professionally and culturally.
“If people like you, they’ll listen to you. But if they trust you, they’ll do business with you.” – Zig Ziglar
Chad Crandell is CEO/Managing Director of CHMWarnick (CHMW) and is a Certified Hospitality Asset Manager (CHAM). He is an active member of the Hospitality Asset Managers Association (HAMA), having served a term as President and also as a member of the committee that developed the guidelines and exam for the CHAM designation. Chad brings over 30 years’ hospitality industry experience to his role of CEO of CHMW, collectively responsible for a current asset management portfolio of over 60 hotels, 25,000 rooms and $15 billion in client hotel investments. For more information about Chad or CHMW, visit www.chmwarnick.com.
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