By Heinz Wehrle
Insights about the job description and specific tasks of a Hotel Asset Manager by visiting lecturer, Heinz Wehrle. Hotel Asset Management requires a holistic overview and understanding of the hotel business in its entirety. It is one of the few disciplines which demands both strategic thinking and analytical application.
What does a Hotel Asset Manager do?
The goal and purpose of the Hotel Asset Manager is to increase the value of the hotel real estate in the function as representative of the owner. To know exactly the objectives of the owner, client or employer is the foundation of our work. The HAM is the link between all involved entities and matches as good as possible the interests of the owner and operator to achieve the best possible profit. Like all other commercial real estate asset classes, the profit defines the value of the real estate.
Two main fields of expertise apply to the assignment of the HAM.
1. Hotel operation and hotel management
Knowing the Hotel Management Agreement and/or lease contract in detail defines the duties of the Hotel Asset Manager/Management role. Monitoring, benchmarking and supporting the hotel operator is the day to day business of the HAM. This requires a fundamental knowledge of the hotel operation and procedures, and most importantly, requirements of the hotel clients.
Providing the shortest rental contracts in the real estate sector, which is one night, is a challenge and requires fundamental market knowledge, the use of the most modern and applicable technology, and not least, good educated and passionate employees representing the hotel company. The access to reliable data allows the HAM to monitor the performance of the hotel and to support the management in increasing the occupation or rooms rates for a better result.
Another important sector is the gastronomy. The establishment’s reputation or image is very often linked to the gastronomy performance and ratings. It is difficult to generate profit and very easy to lose money in this sector. Beside using comparable KPI’s, a profound knowledge of the F&B department is essential. If the hotel property offers additional services like a spa & wellness area, a golf course, a casino or a convention centre, additional skills have to be at hand.
This shows the complexity of the sector. Having all kinds of different hotel categories, locations and property purposes on the one hand, and multinational hotel operating companies with thousands of hotels under management or small local operators or even family operated properties on the other hand, indicates the requirements for the Hotel Asset Manager which most likely are provided by a team as internal Hotel Asset Management Department or provided by a specialized Hotel Asset Management or consulting company.
2. Real estate management
While the hotel operating company is managing the day to day business usually recorded in the Uniform System of Accounts for the Hotel Industry up to the Gross Operating Profit, it is the owner’s obligation to be concerned about all the positions up to Net Operating Income/Property before Tax Cash Flow. There is no doubt that positions in non-operating income like rental or leases, (the financing and capital expenditures of the property), have a direct impact on the net profit for the owner. It is therefore the obligation of the HAM to make sure that each m2 or sq ft us used to its optimum capability, kept in good shape, with the best possible insurance and financing conditions. These responsibilities and time frame are recorded in the hotel asset management plan which ensures to keep all involved parties on the same page.
Changes in the HAM role
Has the function of the Hotel Asset Manager changed in the past few months? The answer is definitely YES! The main concern in the hotel operation is to find qualified and motivated employees, and only game-changing solutions will help solve this problem in the future. The HAM has the possibility of linking several properties to a structure providing education and/or childcare together, for example.
The challenge for the real estate sector is the integration of ESG measures (Environmental – Social – Governance). The EU taxonomy for sustainable activities, such as hotel developments and/or operations, is a classification system established to clarify which investments are environmentally sustainable. It is therefore to be expected that better classified properties and companies will achieve a higher value. A professional documentation and management of environmental, social and governance performance and factors is essential for the value of the property. 64% of the global operating investment companies confirmed that only ESG conform investments will be executed. The CO2 recording applies not only to the day-to-day operations but also the building itself, and belongs therefore to the responsibility of the Hotel Asset Manager.
This confirms that Hotel Asset Management has to permanently adapt to the changes in our society caused by the climate change, governmental decisions, financial shifts for other reasons.