The hospitality industry continues to persevere by repurposing their resources and revisiting pricing models to ensure that money is being put where needed and saved where possible. The focus of hotel asset management has now shifted from cost control to optimizing top-line and bottom-line revenues. This means that the priority now is to manage cash flows and optimize capital expenditure while also taking actionable steps to improve property valuation. This is why early involvement with hotel asset managers can prevent future conflicts down the line with investors.
Here’s what they can do to ensure the long-term profitability of your hotel properties:
1. Re-evaluate Your Enterprise Risk Management Framework
A risk management framework is used to identify potential threats to an organization and define a strategy to minimize these risks. Hotel asset managers, in particular, should know how to handle market volatility and have an action plan ready in case the market priorities and consumer behavior shift again.
Many asset managers often begin their careers as hotel operators, but some start as consultants. They are experts at analyzing strategic issues and making operating recommendations that can improve the value of a hotel asset. This gives them the innate ability to understand the inherent risks of your industry, also making them uniquely capable of mitigating these threats for your business.
2. Bolster Continuity Plans
COVID-19 compelled businesses to adjust their operating processes and quickly put their continuity plans to the test in an effort to survive the economic calamities. Bolstering continuity plans entail resource identification, plan implementation, and team communication. A hotel asset manager can play a vital role in all three practices. In fact, they communicate those plans and all contingencies to critical internal and external stakeholders to promote trust and transparency and help alleviate additional damage. They are also crucial in the drive to ensure the sustainability of a business while also restoring normalcy to operations within the hospitality industry.
3. Reassess Your Valuation Process
A thorough valuation process enables hotel asset managers to determine the current and projected worth of the asset, which in this case is the hotel. This is a crucial step top uncovering how much the investment is worth should the hotel owners want to put the property up for sale. Placing value on the hotel means looking at the operations, the composition of its capital structure, the prospect of future earnings, and of course, the market value of its assets. Additionally, valuing real estate can be challenging as different properties have different features such as location, floor plan, amenities, etc. But ascertaining the value of the hotel property can give the owners a better understanding of hotel assets and resale value.