Investment and Management Strategies to Maximize Value of a Hotel Property
By Richard Takach, Jr. CEO & Chairman , 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.
We must be comfortable not only with our investment partners but also those other companies with whom we do business. We need to know their skill sets, experience, motivations and values. These partners must be fully engaged and committed to helping us achieve our project goals, and be strong and reliable when facing challenges as well as when seas are smooth.