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What is Hotel Asset Management & Why Is It Important?

With over four million hotel rooms worldwide, the hotel management industry is complex and constantly evolving.

The pandemic brought hotel occupancy rates to a historic low of 24.5% in April 2020. But 2023 is expected to be the come-back year for the hotel and hospitality industry, with a rebound in demand bringing occupancy back to pre-pandemic levels. Hotel occupancy will average about 63.4% for 2022, approaching pre-pandemic levels.

In this scenario, running a hotel is no small task. While demand is slowly returning, rising prices are inflating the operating costs of hotels. Hotel owners, asset managers, and operations managers each have their own point of view depending on their individual goals and priorities. 

In this article, we look at why hotel asset management is important and how it differs from hotel management in general.

What is Hotel Asset Management?

Hotel asset management implies managing a hotel as an asset. Hotel management treats a hotel as a business. 

The term hotel asset management expands the scope of the traditional hotel management practice beyond mere oversight of operational aspects of the hotel. Managing a hotel as an asset involves maintaining and enhancing the value of the owner’s real estate investment — with the focus being on meeting the owner’s specific ROI goals.

Hotel asset management as a specialized practice began in the 1990s and grew exponentially in 2017 when Colliers International acquired Vision Asset Management. The goal was to supplement their property management team with further insights. Managing the asset’s investment value throughout its lifecycle is a complex process. It requires a dedicated focus on the hotel’s operational data, the property’s market value, the valuations of the hotel’s brand, and an understanding of capital expenditure incurred through the asset’s lifespan.

Hotel asset managers are specialized in managing hotels as assets. They view the hotel as a source of revenue in multiple ways. 

For example, a hotel’s primary earnings may come from room rent but significant profits also come in from ancillary services such as food and beverage (F&B) and other outlets on the hotel’s premises. Some estimates suggest that the average American hotel generates 65% of revenue from rooms, while 25% comes from F&B and 10% from other outlets.

A hotel asset manager may look at all the possible sources of revenue for the hotel owner — optimizing room rates and occupancy, strategizing F&B packages, discounts, and offers, as well as renting out parts of the property for other commercial uses.

The success of a hotel asset manager’s strategy relies on achieving a significant increase in the asset’s long-term value over its lifecycle. The growth may come from a combination of increased revenue and optimized costs.

Ultimately, the performance of the asset depends on making the right short and long-term decisions about all aspects of the hotel — from daily adjustments of room rates to marketing the property’s unique selling proposition (USP) to creative strategies for branding and managing alliances and partnerships for the brand.

Prosper Hotels has helped hundreds of US hotels increase the value of their assets by tapping into hidden sources of revenue.

We’ll show you how other hotels drive more revenue using data benchmarking, analytics, forecasting, and marketplace insights.

Why is Hotel Asset Management Important?

Investments in hotel properties are unlike most other real estate asset investments, and therefore the factors that impact their valuations in the market are also unlike other real estate assets. 

For example, real estate prices stay relatively stable over the short term. But the pricing for hotel room inventory undergoes constant shifts. 

Rent for other real estate properties is viewed over a fairly long period, typically at least a year or two. But the length of the average traveler’s hotel stay is generally limited to a few days.

Therefore, adaptability and flexibility in daily hotel operations are critical to enhancing hotel asset value. It requires constant optimization in a rapidly changing competitive landscape. 

In addition, you need a team of experts with deep knowledge of hotel industry trends, hotel technology solutions, distribution channels, data analytics, and operational best practices to enhance a hotel asset’s value over the long term.

It’s important to remember that the market changes, and with it comes variations in asset values. As hotel owners navigate these economic changes, they’ll likely seek out resources that can help them keep up with competitors.

Hotels will need strategic leadership and expert guidance from a hotel asset management services company to sail through this critical period and increase the value of their assets.

Prosper Hotels has the right combination of expertise and experience to provide that direction and guidance. Our revenue management strategies are robust and adaptive, helping you weather any storm, even as market conditions change.

What Does Hotel Asset Management Include? 

An effective hotel asset management plan must include a host of elements that balance the hotel owner’s long-term asset valuation objectives versus the day-to-day goals of the hotel’s operations staff.

Revenue Management

Revenue management calls for gathering and analyzing large amounts of internal operational data and external benchmarking data. An asset manager’s ability to devise effective revenue optimization strategies depends largely on the quality of data available. 

An advanced business intelligence platform aggregates data from disparate sources and provides a meaningful visualization for users and stakeholders. 

Hotel asset managers are devising new strategies to move forward in the post-pandemic new normal. Leveraging automation and contactless payment technologies is a big part of this change. A modern property management system (PMS) can automate hotel activities such as guest check-in/check-out, enable contactless payments, and provide mobile notifications for housekeeping services, F&B orders, and other guest services. Automation enhances overall efficiency and reduces expensive delays and mistakes.

Revenue Reporting 

Detailed and accurate revenue reports are another essential element in your hotel asset management plan.

Timely and accurate financial and competitor reporting ensures you never miss out on fleeting revenue opportunities.  

Trust only the experts to monitor and manage KPIs such as occupancy rate, ADR (average daily rate), RevPAR (revenue per  available room), and ALOS (average length of stay).

Prosper Hotels offers a daily revenue reporting service. We ensure that the most crucial reports are in your email box every morning before you get to work — every day, 365 days a year.

And our expert guidance is not limited to reporting. We draw actionable insights from the data to help you optimize room rates, protect your profit margins, and increase asset value.

Operations Analysis

An all-in-one hotel property management system controls and automates operations management across front-desk tasks and back-office services like accounts and billing, housekeeping, F&B, and guest relations.

Analyzing operational performance across customer-facing as well as back-office workflows is crucial to improve the guest experience and enhance the value of your hotel brand or asset. Thorough reporting, real-time notifications and alerts, and an electronic guest management module are essentials for operational efficiency in any modern hotel.

Confused about which PMS system will suit your hotel’s requirements the best? Reach out to our consultants, and we’ll implement a best-in-class PMS and provide you with ongoing support and consulting services to help you with operational analysis.

Capital Expenditure

Capital expenditure (CAPEX) refers to refurbishment and renovation costs that a hotel property incurs over its lifespan.

The lifecycle of a hotel asset can be compared to a yield curve. It starts with strategic planning and launch. The early years display a gradual or steep increase (depending on the hotel’s growth strategies) before entering a stable phase. With age, the asset starts to deteriorate and requires repairs or improvements to maintain its value.

As your property ages, you will need to incur higher CAPEX costs to increase the life of your hotel real estate. 

It’s important to remember that an old property could reach a point of decline where CAPEX costs exceed its revenue and profit potential. A good hotel asset management practice provides an exit strategy well before the property reaches this point of decline. This is crucial to protect the owner’s hotel investment ROI.

Partner with an experienced revenue management company like Prosper Hotels to maintain and grow the value of your hotel asset with proactive revenue management strategies.

Advisory Services

Hotel owners need expert advisory services to support long-term asset management best practices and day-to-day tactical inputs for revenue optimization.

We provide a comprehensive hotel consulting service with actionable insights backed by data. We advise hotel stakeholders on investment strategies that will protect and enhance the value of their property.

Starting with an audit to ascertain your current position in the market to creating a revenue management plan that uncovers hidden revenue opportunities — Prosper Hotels is your partner in hotel asset management.

We also provide ongoing support and training for your revenue managers, general managers, and operations staff to effectively use hotel technology and BI solutions to derive actionable insights from operational data. 

Receive Quality Revenue Management Services with Prosper Hotels

Prosper Hotels is dedicated to growing your revenue, optimizing your operational costs, and helping you enhance your asset value over the long term.

Our consultants and revenue experts work with you to build a robust hotel asset management strategy.

Find out how we’ve helped hundreds of local and international hotels to find untapped revenue streams.

Schedule a consultation call with our hotel business experts today. 

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