Who's Watching Your Asset?

By Steven Belmonte CEO, Vimana Franchise Systems LLC | January 12, 2010

Sound familiar in your business? Unlike Waldo, owners wear many hats - especially multi-property owners and those with supplemental real estate investments outside of hospitality. Managing a vast portfolio can't be done alone, so oftentimes these owners hire a management company to oversee day-to-day operations.

But who's watching the watchdog when the asset isn't performing and investment objectives aren't being met?

Enter the role of the asset manager. Selecting an asset manager from among a sea of look-alikes, however, is a risky business for owners and institutional investors. Neither party, not even those who own a lodging property on a temporary basis, wants to turn over a hotel's operation to someone who is a rank amateur at the task.

Asset Management Defined

Understanding the role of an asset manager can be confusing. To many, there is a fine, almost invisible line between an asset management company and a hotel management company-especially when a hotel management company offers asset management services. The differences, however, are distinctive, as the asset manager provides more of a protective layer between owners and third-party management companies.

An impartial, third-party asset management company becomes the eyes and ears of owners, identifying quickly if the management company is overseeing the property skillfully and professionally, meeting operational efficiencies and charging appropriate fees. Likewise, an asset manager acts as a knowledgeable intermediary between the owner, the franchise company and management company to generate the best returns on their investments.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.