Skift Take

Hotel asset managers can be specialist advisors and go-betweens for owners and operators. As the asset-light model and third-party management spread in Asia Pacific and beyond, asset managers will gain influence as strategic allies.

Series: Early Check-In

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Expect a rising demand for hotel asset managers, especially in Asia Pacific. This is a trend I believe has gone mostly unnoticed. The demand will be driven by changes in ownership structure.

  • My colleague Peden Bhutia recently interviewed Hilton’s president for Asia Pacific, Alan Watts. The interview was wide-ranging, but I was struck by comments Watts made on how Asia Pacific’s hotel market would evolve.
  • Today, most Asia Pacific hotels are either owner-operated or their owners hire a brand like Hilton to run them.
  • Yet Watts said owners will increasingly hire non-brand management companies.
  • “At some stage, Asia will see … the rise of third-party white label management companies acting on behalf of both brands and owners,” Watts said.

As more hotel investors adopt third-party management, a parallel trend is emerging: Many hotel brand groups are moving to an asset-light model.

  • The asset-light model means that hotel groups rarely own or lease long-term lease hotel real estate. 
  • Groups instead mostly run properties through management or franchised contracts.
  • They leave the ownership of buildings and land to families or investment firms.
  • Marriott was the first to move in this direction in the mid-1990s. But it’s relatively new in Asia Pacific, Latin America, and some other regions.
  • IHG claims to be the most asset-light. Marriott isn’t far behind. This year Accor, Hilton, Hyatt, and others reaffirmed they are moving to be more asset-light.

The shift by owners to third-party management and the move by hotel groups to be asset-light are together creating a knowledge gap in how to run hotels.

  • When hotel groups stop owning hotels, they become distanced from evolving issues in day-to-day operations.
  • When owners stop being hands-on, they also lose touch.

Ideally, an independent asset manager can fill the gap, especially at luxury properties.

  • Asset managers can build trust between owners and operators, providing an outside perspective and helping with communication and conflict resolution.
  • Asset managers can grasp the frustrations faced by general managers, revenue managers, and front-line staff at properties, while also understanding owners’ priorities in driving revenue, cost efficiencies, and profits/fees.
Four Seasons Madrid - Exterior Day Shot
Example of a hotel that uses an independent asset management firm for assistance. Source: Four Seasons Madrid.

Not all asset managers are equal. Some just provide perfunctory services. But others have a hands-on, custom approach to boosting a hotel’s performance.

  • Some asset managers just describe issues in reports after the fact. Ideal ones have operational experience and get ahead of issues. For example, owners may want to improve a property’s online review scores, but they may not know the best practices. An ideal asset manager ought to be able to coach the staff on the latest techniques for boosting rates and for attributing how improvements have enhanced a property’s pricing power.
  • Some asset managers dispense generic advice. The best have the local market knowledge to advise on tactics tailored to a hotel’s circumstances.
  • Some asset managers take a combative approach to operational staff. The best take a coachable, collaborative approach that empowers hotel teams.

I learned the above points from Alex Sogno, who founded Global Asset Solutions 16 years ago and whom a few people recommended to me as one of the stars in the field.

  • Sogno’s firm, which has more than 40 luxury hotels as clients, offers training to build credibility with operators. If you want to win over a hotel’s operational team to your vision, it may help to provide training that makes your advice practically actionable. You are more likely to get “buy-in” if you clarify how following your advice will help boost the career prospects of the people you’re working with.
  • Sogno used to teach a course at EHL (École hôtelière de Lausanne), one of the premier hospitality schools. His firm has created an online program that teaches asset management and is accredited by the ILHA, the International Luxury Hotels Association.
  • His firm has received praise from clients. “It’s a pleasure partnering with Global Asset Solutions,” said Adrian Messerli, regional vice president, and general manager at the Four Seasons Hotel and Resorts in Madrid. “There is a clear understanding of owner versus operator responsibilities.”
  • Sogno has previously managed hotels for the Four Seasons, Raffles, and Fairmont brands in Europe, the Middle East, and Asia Pacific for Prince Al Waleed bin Talal Al Saud’s Kingdom Holdings in Saudi Arabia.

While Sogno was “talking his book” to me when describing the benefits of what he does for a living, it did make logical sense to me that the rise in the asset-light model and third-party management worldwide will create a need for more asset managers as go-betweens, specialists, strategists, brand auditors, and conflict resolvers.

What does a hotel asset manager or hotel asset management firm do?
A hotel asset manager or a hotel asset management firm is responsible for overseeing and managing the operations of a hotel property to maximize its financial performance and enhance its overall value. This involves strategic decision-making about the hotel’s operations, planning capital improvements, negotiating with stakeholders, monitoring industry trends, and potentially driving strategic initiatives like enhanced reporting processes.

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Tags: asset-light, Early Check-In, future of lodging, hotel investments, hotel operations, Skift Pro Columns

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