You think running a hotel is easy? You are wrong.
Once upon a time, a hotel offered just a bed to rest your head, and then the introduction of breakfast followed. Some time later, the 'hotel' became the 3 B's - 'bed', 'breakfast' and 'booze' (think salons), and now we have arrived at a time where there are hotels competing to offer almost anything a guest could possibly desire.
We see in the film Oceans 12, when Brad Pitt received his cut of the money from the heist in Oceans 11, he went and bought The Standard Hotel. It was obvious that he hadn't taken the online course from the world's No. 1 hospitality management school EHL (Ecole hôtelière de Lausanne), as his business went bankrupt, and investing in hotels became a running joke throughout the movie.
You think running a hotel is easy? You are wrong.
The hotel business has now become more complex and requires more depth of knowledge and range of skills. It requires a holistic overview, strategic thinking and analytical application if you want to be able to understand the whole business. One fundamental skill-set for success is hotel asset management.
What is Hotel Asset Management?
It all started when hotel companies went public in the late 1970s and early 1980s, and subsequently evolved from the original business model of being exclusive owner-operators towards becoming more asset-light.
What followed was a continuing separation of the hotel model into real estate, operations, distribution, and brands with distinct organizations specializing in each element.
Various factors feed into the success of a hotel's asset management, which contributes to financial performance. A hotel's location, real-estate value and even furniture, fixtures and equipment (FF&E) all play a part here. In a nutshell, asset management aims to maximize the value of hotel property.
Why is Asset Management Important?
Whether or not you want to manage your own asset or hire someone to do it, it is important that you acquire the fundamental knowledge of hotel asset management. Understand the core value centers of hotels and why they are so, as well as valuation methodologies and how to apply them to develop accurate valuations of your assets.
Sure, there are a lot of operators and owner representatives including hotel asset managers that are waiting in the wings out there to work on your behalf, but it can take as short as five weeks to build a solid foundation and core skills that are required to be able to manage your hotel assets, including being able to conduct Feasibility Analyses, Valuation Analyses, Financial Analyses, Investment Analyses and Valuation, as well as Hotel Management Agreement (HMA) negotiations.
"Real estate is an overwhelmingly prominent component of a hotel's value. Beyond owners, even the operational side of the hotel industry are now increasingly sensitive to decisions which enhance real estate value. Mastering the concepts of valuing, financing and investing in real estate assets is a fundamental necessity to claim leadership position in the industry," said Dr Prashant Das, Associate Professor of Real Estate Finance at EHL.
Overviews and detailed analyses of hotel businesses are useful pieces of information to have - you need to know what revenue has been generated and from where, how much different room types bring in, how profitable the restaurant is or how lucrative the spa area has become. A combination of operational and property knowledge allows you to identify potential new streams of income. For example, perhaps assets might be better leveraged by completing strategic refurbishment projects or considering more acquisitions.
Having this fundamental knowledge should be a baseline for all sides to ensure that your assets are performing optimally. Develop this strategic perspective and skill-set in just five weeks online, anywhere you want.
This online certificate is based on EHL’s MBA in Hospitality program. For more information on the MBA program, you can visit the program details here.
Disclaimer: This content was adapted from https://hospitalityinsights.ehl.edu/.