For the last decade, RBH Hospitality Management has been one of the United Kingdom’s torchbearers for third-party hotel management, a sector of industry operations that continues to evolve.

RBH Chief Financial Officer Andrew Robb said he is aware of significantly more third-party hotel operators today than there were when the firm was founded close to 25 years ago. He said as third-party hotel management has continued to evolve, RBH executives have had to keep learning.

“Learning from every takeover, every opening and every owner that we work with,” he said. “These learnings are what make us a strong business, and we are also proud to have an average length of service of over 10 years across our senior team, meaning we retain this knowledge and experience in the company.”

There are some key aspects that set apart some third-party operators from others, Robb said. These include strength and depth of in-house resources; a demonstrated focus on environmental, social and governance; experience in operating hotels in the upper-upscale and luxury hotel segments; a good commercial track record; and the ability to provide project management support for capital expenditure projects.

RBH’s hotel portfolio has grown to more than 7,000 rooms, which includes branded hotels in several price points as well as independents.

“It is always great to secure additional growth, which we are very proud of, but this does not change how we engage with and support our hotels and our investment partners,” he said. “Our support structure is aligned to owner investments rather than geographically or by asset type, so that the focus is on the day-to-day relationship with the owner.

“We are very conscious that a key strength of our company is our culture and our people, and that growth cannot impact this in any way.”

Susan Bland, RBH’s managing director, said the success of the people part of the business comes from focusing on culture and creating a company people want to be part of, which encourages innovation and transformation.

She said the culture created “prioritizes the health and well-being of our team, offers development opportunities for all and gives flexibility to work in ways that best suit the individual.”

“Having a successful and empowered team drives the returns for our owners,” she said. “The labor market is challenging across all geographies currently, both from an availability of talent and from an increasing costs perspective, [but] having a reputation as one of the top employers in hospitality and a culture that reflects that is key to being able to continue to grow.”

The need for innovation has never been needed so much before, with costs increasing in every aspect of running a hotel and ESG requirements demanding much of both ownership and operations, Bland said.

The company's ESG strategy is split into three areas: decarbonization of existing and new hotel assets, biodiversity and “hearts and minds.”

“In each area, there are large numbers of low-cost options we are utilizing to make a substantial difference to the businesses we manage," she said. "For instance, changing to LED bulbs and installing water aerators in showers and taps have a smaller initial outlay and demonstrate a return on investment of less than three years in most cases."

“The high-cost initiatives are generally associated with de-carbonization … and how and where utilities are generated and consumed. With the recent increases in the cost of utilities, the majority of our owners are open to discussing options for generating our own as we are able to demonstrate a far shorter return on investment than in previous years, and it is well accepted that this will assist in future-proofing the valuation of our hotels,” she said.

Currently, 85% of RBH’s portfolio has “Green Tourism” accreditation.

“Our owners understand the risk that this brings to their business should they not invest in this key area,” she said.

RBH is increasingly moving into the upper-upscale and luxury tiers, CEO David Hart said.

“To do so might have been perceived as quite a departure for RBH as historically there has been a perception that we operated a number of mid-tier properties, such as Holiday Inns and Holiday Inn Expresses, but several of our team have extensive experience in [these segments] so we felt well-prepared,” he said.

RBH opened its first large, branded luxury property, the Westin London City, in late 2021, he said.

"The performance there has been extraordinary and a real validation of our credentials. In addition, we opened the Gantry in London [a Curio by Hilton collection property], which has a unique range of [food-and-beverage] offerings alongside a spectacular room offering that has also performed well beyond expectations.”

Hart added that showing owners RBH could be successful in this space resulted in the company beginning to manage U.K. hotels such as the Principal York and Wotton House.

“There will be another superb announcement coming very shortly as well,” he said.

Recently, RBH signed a management contract for two hotels owned by the Reuben Brothers, a 48-room hotel and a 52-room hotel, both in Berkshire, England.

Robb said this partnership has everything to do with the relationship between manager and owner, not the size of the hotels.

“The two hotels … may be smaller than we traditionally operate, but we can still add significant value, and they are both upper-upscale hotels with a strong focus on F&B, which is a key part of our recent growth,” Robb said.

Another notable alliance is with Melbourne, Australia-based hotel management company Gatehouse Hospitality, essentially RBH’s first venture out of the U.K.

Hart said the two companies have shared information on their respective markets and operations, and they can leverage the benefits each business brings.

“We are at different stages of our growth. Our scale and historical experiences have been beneficial to Gatehouse as they look at how they expand and address the growing pains that businesses such as ours have come through,” Hart said.

“From our point of view, we have been able to tap into the mindset of having a blank sheet of paper more easily by looking at how we can work more efficiently and perform even more effectively for our partners, rather than weighing too heavily on how we have always done things and using the same thinking we have always had.”

Bland said RBH is enjoying that the hotel industry and travel demand have rebounded, but the mix of guests now is somewhat different.

She said the recovery, especially in the U.K. — first leisure, then business and leisure or “bleisure,” then a little corporate — has been now fueled by the return of international visitors, notably those from the U.S.

On the other side of the equation, labor availability challenges and an increasing cost base are causing headaches.

Bland said this “has led to hotels in the U.K. and in mainland Europe predominantly having rate-driven strategies ahead of occupancy. With increasing average daily rates come increasing guest expectations and a shift of perspective of ‘value.’ We believe this trend will continue, driving guests to look at the upper-upscale and luxury properties more and utilizing the increasing focus on ESG to inform their choices.”

Hart added the economic scenario provides opportunities for a company such as RBH.

“Partly due to the smaller size of the market, generally compared to the likes of the U.S., [in the U.K.] there are a few established third-party players with a number of smaller providers attempting to start up and gain traction. This is leading to a potential commoditization of the market and downward pressure on fees as certain providers try to gain some scale,” Hart said.

“Over time this should stabilize, but in the meantime, it means established players such as [RBH] must demonstrate how we provide a superior service that adds more value for owners and more than justifies a potentially higher fee, which is necessary for the more significant cost base we have that is required for the more substantial service we provide.”

There's still runway for third-party hotel management to grow in the U.K. and Europe, Hart said.

“There are still a significant number of existing and potential owners in the U.K., and even more so when you talk to investors that are coming from Europe and Asia, who don’t fully understand third-party management and what it means,” he said.

“We and our competitors are often seeking to offer different solutions or alternative models to gain traction with particular types of investors.”

He added that some third–party management firms take on leases and/or offer solutions such as employing hotel staff.

“This is something that may not be necessary in a more developed market,” Hart added.

Hart said RBH’s preference is to initially move into Europe with an existing partner.

“Further afield, we see the Australian and Asian markets as being potentially huge opportunities for third-party management,” Hart said. “They seem to be where the U.K. market was around 20 years ago, with significant brand management in place, and there is no reason to think that the same benefits of third-party management cannot also be delivered in those markets.”

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