Hotel Management 2.0

At first glance, third-party management companies and their counterparts that both own and operate hotels appear to be cut from the same cloth. Scratch the surface, and you’ll discover profoundly different cultures that can make a difference when it comes to maximizing revenues – and profits.

Both are responsible for day-to-day operations including budgeting, planning, renovations, recruiting, human resources, revenue, distribution, food-and-beverage, meetings, sales and marketing, including public relations, social media and managing property websites.

But owner/operators like M&R Hotel Management bring something more to the table: the perspective of an investor whose money is at risk. We may have everything to gain by their decisions and actions, but we also have everything to lose.

Owner/managers are less encumbered by procedural hurdles such as formal capital expenditure proposals and approvals that can inhibit progress. For example, we can allocate funds immediately to make improvements that promise to boost ADR.

We made such a decision recently at one of our hotels at JFK International Airport. During an inspection, we noticed that the marble bathroom floors didn’t look pristine because they weren’t polished. So we decided on the spot to hire a contractor to polish them.

Within weeks, we received higher guest satisfaction scores. The greater the sense of urgency, the faster the improvements will be completed and the more guests will benefit. Happier guests mean higher guest satisfaction scores.

Similarly, we can make aggressive rate changes in response to rapidly changing market conditions without going through a formal proposal and waiting for approval. By acting quickly, we capture revenue gains faster.

Owner/operators can approach management of a hotel holistically, giving architectural, design and construction issues simultaneous and equal consideration with operations and marketing.

The bottom line for other owners is this: When evaluating the strength of a prospective management company, ask whether it ever owned hotels. When a management company has walked in an owner’s shoes, the more effective it can be.

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