President & CEO at AD1 Worldwide, a fully integrated hospitality, acquisition, development and management company headquartered in Florida.
As a hotel owner, selecting the right management company is one of the most important decisions you can make. Choosing the right partner can make or break your investment. Therefore, the selection process can be complex. But if you can focus on the most vital components, you’ll be better equipped to make the choice that fits your needs.
5 important factors when choosing your hotel management partner
To make sure you hire a company you can trust, here are five things to keep in mind.
1. Track record
It is important to know how the hotel management company in question has performed and grown since its inception. But the key is to learn about performance, not just in terms of success, but also in terms of failures. This will ultimately provide a better understanding of how the company has approached day-to-day operations to improve long-term performance in managing its properties.
Good hotel management companies will never lose the opportunity to brag about their performance, so don’t hesitate to ask for details about how they have improved their indicators. It is also important to know that the company will not compromise its service or overwhelm its staff. My advice is to check guest reviews online and see if the company has received any respected awards in the hospitality industry. It is also a very good sign if the company has a good reputation and trust with the brands it works with.
Today, the catering market is very diverse. Besides hotels, management companies differ greatly in terms of the services they offer. There are many differences between managing a five-star all-inclusive hotel on the coast and an economy motel on the country road. You should choose a hotel management company that specializes in the type of real estate you own, considering factors such as size, location, and target market. If the company’s strategy for similar properties worked well before, there’s a good chance it will work again.
Different hotel management companies offer different services, but most of the operational services are the same. They include services that generate and manage revenues and profits such as sales, marketing, revenue management, accounting, accounts receivable, invoices, finance, reporting, etc. Hotel management companies can also offer services that attract qualified and well-trained employees by directly responsible for consistent hiring, training , compensation and the creation of a people-oriented culture in the company. Some services are not always the responsibilities of a business, but they are no less important to an owner. These services may include renovation management, advisory services, asset management, etc.
When choosing between hotel management companies, you should make your decision based on the services your property needs. Explore the market and find a number of companies that appeal to you in every way. If the choice does seem difficult to make, ask the contenders to prepare a quote request for you. Based on the RFP presentation, you better understand which company best fits your expectations.
4. Operating margins
Returns are the main concern for any investor. But this is directly related to how the entire team is performing and delivering consistent quality of service. Different management companies offer different operational returns, but not all deliver consistently. The level of return depends directly on the level of management skills and your negotiated percentage, so make sure you’re happy with both before committing to a management company.
The hospitality industry is a sector in which people are central. In this industry, values come first. By partnering with a hotel management company, you create a partnership that cannot be successful without trust, dedication and respect. Do not underestimate the importance of these properties. When choosing from different hotel management companies, you need to learn about the owners and main characters of each company. What values do they glorify? What are their relationships based on? Do you share the same beliefs and values? Do you expect the same from your partnership? Once you have these answers, you can make the best choice for your property.
I work in the hospitality industry and personally I pay special attention to people and their values. The core of the hospitality industry is people. Every hospitality business must have strong moral standards, and only if these standards are respected can it grow and prosper.
Ultimately, when choosing a hotel management company, you want to make sure that your decision is based on two main pillars: results and values. Finding the right balance between hard and soft values is the key to a long-lasting, fruitful and enjoyable business relationship.