The evolution of asset management within the hospitality space is a phenomenon that seemingly happened overnight.
In academia, new asset management fields and degrees are popping up all the time. Asset management professionals have become an increasingly important part of the investment process, and traditional operators and brands are adding asset managers to their payrolls. My own career moved from portfolio management to finance to asset management as the needs of my employers changed. This is hardly a unique experience in today’s world.
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Asset management from within an operating company or brand can present a unique set of challenges for both the asset manager and the operator. Because asset management is a relatively new discipline, especially within the hospitality space, cynicism from coworkers abounds. Experienced hoteliers may see no need for the oversight and particular expertise provided by asset managers, who may have arrived from organizations more closely associated with investment or finance. This issue can be further complicated when the asset manager is part of the hierarchy of a company. The asset manager has no authority, but instead needs to build credibility over a period of time. General managers often do not report to asset managers, but asset managers are expected to drive results at the properties nonetheless.
With this in mind, an internal asset manager’s first priority should be achieving real buy-in from the executive committee and board members. In this case, “buy-in” does not refer simply to the goal of earnings before interest, tax, depreciation and amortization growth and better margins, but to a more detailed variety that involves changes necessary to meet those goals. To put it bluntly, “Is your company willing to do what it takes to make your suggestions a reality?” This also requires an embedded understanding of corporate direction that should be the basis for the asset manager’s decisions.
Start with data
Real change is difficult to achieve without the sponsorship of an owner or umbrella asset management company. In such a world, indeed for any asset manager, data is king. Efforts to obtain data also are the least likely to face serious resistance. A good asset manager knows what data is necessary and should be able to present return on investments supporting decisions to improve and expand data usage. Implementation of new systems that produce better data, such as modern time and attendance programs, can become serious projects on their own. Obtaining information from third-party data sources such as STR (parent company of Hotel News Now), TravelClick, Calibri Labs, etc., is an even easier first step if it is determined that what is currently being examined does not meet industry standards, which is very often the case.
While implementing changes on the data side, offering suggestions on process and standardization is a very logical next step. This accomplishes both the integration of the revised data program into corporate culture and the slow alteration of processes to fit the greater goals of increased efficiency and EBITDA production.
With new processes in place that utilize proper data and analysis, it’s time to look at the greater organization and question the status quo at every turn. When working as part of an asset management team layered on top of an operating company, that team often adheres to a protocol. As an individual within the operating organization, questioning the status quo becomes the bread and butter for long-term success. A mentor once told me, “If you’re not making some people uncomfortable or angry then you’re probably not doing your job as an asset manager.” Being alone in this endeavor can be frustrating, but it is an absolutely necessary aspect of the work.
Manage your own expectations
Asset managers are a results-driven bunch who like to know that their work is having a positive impact on the bottom line and quickly moving in the right direction. Change can be glacial, and resistance fierce. Unreal expectations can lead to unreal estimates. When those estimates fall short, credibility is lost. Take the time to understand a new environment. Learn to operate within that space to find more allies.
Finish with results
All too often, great ideas are implemented with great results that no one ever learns. Being able to quantify and display results that reflect assumptions made going into a project can go a long way toward building goodwill and credibility, even if that simply means hitting deadlines and costs expectations. The next step in the grand plan may hinge on the success of the most recent venture.
Starting with good data and better processes, asset managers build the foundations for a more informed organization. A more informed organization is more likely to accept the challenges to the status quo and the asset manager’s suggestions. Keeping one’s expectations realistic and presenting results in-line with expectations will build credibility.
There are many positives in being employed by an organization that sees the value of asset management. This article should in no way diminish that. In fact, working shoulder-to-shoulder towards that common goal is a very rewarding experience. The deeper engagement with hotel teams is a very educational one. Having to build trust over months and years can be frustrating, but I believe the bond, once built, can achieve great things.
Craig Wienckowski is corporate director, revenue, pricing and asset management, at Outrigger Hotels and Resorts, where he is responsible for balancing the financial objectives of different lodging products to maximize total revenues and profit associated with guestrooms for Outrigger properties in Hawaii and Guam. His primary focus is as owners’ representative for Outrigger’s Hawaii-owned properties.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.