Owners looking for the perfect relationships with brand and management companies should consider finding business partners that have similar goals for their properties.
Given the proliferation of hotel brands and their changing positioning, owners and asset managers can gain a competitive edge by aligning themselves with insiders who have an intimate knowledge of brand standards, value propositions, distribution and marketing and loyalty programs.
Where can owners find such a resource? Undoubtedly the most effective way is to contract with a management company that is integrated fully into the brand enterprise. By working with a management company, owners will be at the front of the pack when it comes to benefiting from brand initiatives and competitive insights.
Owners can leverage this advantage further if their management company is intertwined with a brand enterprise that owns and operates its own portfolio. Such brand enterprises are based in the same reality as owners and share their interest in maximizing bottom-line profitability relative to their respective investments.
Moreover, brand enterprises typically use their owned properties to test and prove the value of new concepts before introducing them to the entire system. This reduces the risk to independent owners by ensuring their hotels are not used as guinea pigs to test new ideas.
Likewise, a brand enterprise that owns its properties is more likely to be on the same page as independent owner when it comes to financial goals, notably desired hold time for the asset, cash investment needed to achieve brand standards, as well as operational objectives, property value and revenue per available room index.
Brand enterprises and their respective management companies understand that data and performance metrics are a direct link to value and that, depending on the objectives of a particular owner, the ability to execute at the highest level can really be validated by the data.
For example, market share is critical because that’s how the financial community determines value. Consequently, it is the best and least-biased way to evaluate a hotel’s success.
Similarly, expense control measures should be performed side-by-side with hotel-based teams. Findings then should be vetted with the teams, not dropped on anyone’s desk in the form of a white paper. To do otherwise almost certainly would demotivate a property team from day one.
My final bit of advice for owners seeking a management company is to look for one associated with a global brand enterprise. Whereas 30 years ago U.S. brands focused narrowly on their local, regional and national markets, today everything is global. We now must be aware of how a terrorist attack in France or the war in Syria will impact our ability to be successful. A global brand enterprise understands these issues.
The owner, brand and operator: Three takeaways
- Owners and asset managers can gain a competitive edge by aligning themselves with management companies that are fully integrated with a brand enterprise.
- Brand enterprises that own and operate hotels make better partners because they share owners’ interest in maximizing bottom-line profitability relative to their respective investments.
- Global brand enterprises and their management companies can help independent owners navigate the market currents that ripple from events outside the United States.
Joseph (Joe) Berger is Executive Vice President & President, Americas for Hilton Worldwide. He is responsible for the operations functions of over 300 corporately managed Hilton Worldwide hotels and Hilton Grand Vacation resorts throughout North, Central and South America.
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