Investment and Management Strategies to Maximize Value of a Hotel Property

By Richard Takach, Jr. President & CEO, Vesta Hospitality | August 03, 2014

Hospitality has a glamour or cachet unlike any other form of real estate, even high-end retail. Partnered with communities and appealing to demanding and sophisticated guests, each hotel property has the dynamics of a small city. Thus, investing in, owning and managing a hotel property can be an exhilarating journey. The key to success is to enjoy the experience, while paying careful attention to choices and decisions that must be made along the entire chain of investment and management. The result can be strong daily operations and competitive posture, in addition to enhanced asset value and return on investment.

In this article, we will review in list format some of the key investment and management strategies that go into maximizing the value of a hotel property. In doing so, we will consider the areas of investment and financing, business operations, and management and the competitive environment. Clearly, the factors discussed are not meant to be all-inclusive, but, rather, will focus on common threads we find running through hotel investment, management and valuation.

Investment and Financing

  • Align Yourself with the Right People

Hospitality is at its core a people business. It is no different when choosing our investment partners. Some of the attributes of people that can insure the best success for your hospitality investment include: expertise and experience in working with similar projects; a relevant and solid track record; a "non-litigious" outlook on conflict resolution; an understanding of how hotels make profits and how they can add value to this process; a "supportive" cultural foundation when challenges arise (as they always do); deep value placed upon long-term relationships; and a genuine character based upon integrity and trust.

When third party managers are involved, they must be investor friendly and understand hotel operations from an owner's perspective. In particular, successful hotel operations do not assuredly translate to a successful investment, but, rather, are an important contributor to the overall investment.

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.