Successfully Outsourcing Hotel Operations While Maintaining Control of Your Property

By Edward Donaldson VP Marketing, Small Luxury Hotels of the World | October 28, 2008

Within the Small Luxury Hotels of the World brand, many hotels have been owned and operated by the same families for many years. Some of our European members have had family ownership through generations. Today, however, owner/operators find themselves in a very different environment to that which existed even just 15 years ago. The hotel business is demanding of an individual owner's time and resources. Historically, one owner/operator is so intimately involved with his hotel that he sees no reason to record any details on the business. An owner/operator would then pass on this proprietary knowledge to his children and they in turn would manage the business pre-armed and educated in the dynamics of the hotel.

Today traditional owner/operators are finding that their children do no want to spend long hours toiling in a hotel and prefer to pursue other professions, such as law, banking or medicine. Consequently, the owners of small luxury hotels are finding it increasingly difficult to plan their retirement. They cannot pass the hotel on to their children because they are not interested and finding buyers is increasingly difficult. Additionally, many independent owners wish to retire from the business but not divest themselves of the asset. Indeed buyers today are extremely sophisticated and informed and demand of vendors a high degree of statistical information on the historic performance of the hotel, and not just audited accounts.

The dilemma therefore is if you are intending to retire from a life managing hotels, how do you plan for it? How can an individual owner prepare all the statistics that will facilitate a sale? How can a hotel be marketed to potential buyers? What if the owner does want to sell at all, but his children do not want to manage? How can an owner retain possession and not have to run the business or rely on another individual to manage the operation on his behalf?

One solution would be for owners to engage the services of a specialist management company who can make available to a hotel the full range of skills to ensure financial success. Generally speaking most individual managers are expert in one field of the hotel business including the three key fields of service, marketing and accounting/finance.

As the independent owners seek alternate solutions, management companies are fulfilling the needs of these owners. One such firm, Luxury Hotel Partners Limited, a niche European hotel operator specializing in the small independently owned luxury hotel sector, manages the properties on the owners behalf allowing them to retain the property as an asset, free themselves of the daily operational burdens and insure the future value of the property.

Knowing that in most cases the owners look at their properties as they would their own children, management companies like Luxury Hotel Partners often remain very inclusive by providing the owners of the hotels a high degree of control over their asset through a regular reporting program. Such management firms must fully appreciate that for a successful owner/operator to relinquish the day-to-day operation of his hotel is a difficult decision. It is key for the ownership and management to work together to ensure a not only a seamless transition, but also secure the overall success and profitability of the hotel continuing the legacy that has been established.

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