President & CEO at AD1 Global, a fully-integrated hospitality, acquisition, development & management company headquartered in Florida.
As a hotel owner, selecting the right management company is one of the most important decisions you can make. Choosing the right partner can make or break your investment. Therefore, the selection process can be complex. But if you can focus on the most vital components, you’ll be better equipped to make the choice that fits your needs.
5 Key Factors When Choosing Your Hotel Management Partner
To make sure you’re hiring a company you can rely on, there are five things you need to look for.
1. Track Record
It’s important to know how the hotel management company under consideration has been performing and growing since its foundation. But the key is to learn about performance not only in terms of success but also in terms of failures. This will ultimately provide a better understanding of how the company addressed day-to-day operations to improve long-term performance managing the properties.
Good hotel management companies will never lose a chance to boast about their achievements, so don’t hesitate to ask for specifics about how they improved their indicators. It’s also important to know that the company won’t compromise its service or overwhelm its staff. My advice is to check guest evaluations online and see whether the company has received any respected awards in the hospitality industry. It’s also a very good sign if the company has a great reputation and trust among the brands it works with.
Nowadays, the hospitality market is very diverse. Beyond hotels, management companies vary tremendously in terms of the services they offer. There are many differences between managing a five-star all-inclusive hotel on the coast and an economy motel by the country road. You should choose a hotel management company that specializes in the type of property that you own, considering factors like its size, location and target market. If the company’s strategy for similar properties worked well before, there are good chances it will work again.
Different hotel management companies provide different services, but most of the operational services are the same. They cover services that generate and manage revenues and profits, like sales, marketing, revenue management, accounting, receivables, billings, finance, reporting, etc. Hotel management companies can also offer services that bring on qualified and well-trained employees by being directly responsible for consistent hiring, training, compensation and creating a people-centric culture in the company. Some services are not always included in a company’s responsibilities, but they are not less significant for an owner. These services could be renovation management, consulting services, asset management, etc.
When choosing between hotel management companies, you should make your decision based on services your property needs. Explore the market and find a couple of companies that attract you in all respects. If the choice still seems difficult to make, ask the contenders to prepare request for proposals for you. Based on the RFP presentation, you will understand more clearly which company fits better to your expectations.
4. Operating Margins
Returns are the most important concern for any investor. But, this is directly related to how the entire team performs and delivers a consistent quality of service. Different management companies provide different operating returns, but not all of them deliver consistently. The level of returns directly depends on the level of management skills and your negotiated percentage, so be sure you’re satisfied with both before you commit to a management company.
The hospitality industry is a people-centric industry. In this industry, values come first. By working with a hotel management company, you’re creating a partnership that can’t be successful without trust, commitment and respect. Don’t underestimate the importance of these traits. When choosing from several hotel management companies, you need to learn more about each company’s owners and main figures. What values they extol? What are their relationships based on? Do you share the same beliefs and values? Do you expect the same things from your partnership? Once you have these answers, you can make the best choice for your property.
Working in the hospitality industry, I, personally, pay special attention to people and their values. The core of the hospitality industry is people. Any hospitality business must have strong moral standards, and only when these standards are respected, it will be able to grow and prosper.
In the end, while choosing a hotel management company, you want to make sure that your decision is based on two main pillars: results and values. Finding the right balance between hard and soft values is key for a long-lasting, fruitful and enjoyable business relationship.
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