A Hotel Asset Manager Hotel has a large and complex responsibility – for buildings, people, and the brand. He or She has a fiduciary responsibility of managing the lodging investment to meet the specific objectives of ownership. It is their job is to build the value of a hotel’s portfolio and physical property. And, they must integrate a complex information system of channels into equity markets, construction and architects, banks and other lenders, as well as have deep experience in hotel management. This Owner Representative provides targeted and effective oversight of the assets that produce a measurable return on investment to the hotel owner. They assume complete responsibility for the hotel’s operations and performance, quickly learning, analyzing, and documenting the hotel’s strengths and weaknesses. The asset manager will structure a detailed strategic plan that defines the depth, breadth, and term of the commitment. And, then, the hotel asset manager will monitor the subsequent implementation – with all its successes and failures – in reports to hotel ownership. 1) Market Opportunity Timing and market opportunity are the unpredictable major keys to a return-on-investment in hotel real estate. There is a layered volatility. While the rise and fall in room and meeting occupancy is one cyclic level, there are also the volatile swings in financial investments and in property acquisition and disposition. The tough task, therefore, lies in maximizing these returns. The recent HVS USA Hotel Valuation Index, through first quarter 2012, forecasts sustained value growth through 2016. There will be more selling opportunities than buying. Average rates of RevPAR and ROI will grow, and there will be limits on new hotel supply. But, it is still the job of Hotel Asset Manager to sort these statistics, forecasts, and related information: Highs in value growth will plateau in 2012-2013. US GDP increased throughout 2012. Payrolls increased throughout 2012 and unemployment has dipped below 8%. Equity yields rose from 14.1% to 16.3% and continue into 2013. Hotel per room values will exceed the all-time high of $100,000 in 2006, reaching $120,000 by 2016. Valuations hit their low of $60,000 per room in 2009. Corporate profits grew 4.8% through July 2102. Financing loan to value ratios are at 60-65% with interest rates at 6-7%. RevPAR grew 7.3% through first 8 months of 2012 from strong 8.2% in 2011. Occupancies averaged 63% up 1.7% over 2012. According to hotel consultants PwC, RevPAR will increase 7.2% this year on a 4.6% rise in room rates and a 1.5-point gain in rooms occupancy. Healthier businesses and wealthier individuals seem less hurt by the travel economy and contribute to the survival and success of high-end properties – although they have had to do their fair share of juggling. 2) Hotel Construction New construction projects are up 22% in the hotel development pipeline. New starts are up 14% say other hotel development advisors. Supply could start to impact buy and sell values in 2014 to 2015. Hotels have maintained their own through the 2009 recession and recovery. And, ongoing and evolving evidence suggests the momentum will continue. With changes in the American dollar and position vis a vis Europe and China, international travel to the US is expected to continue. If the market in low and mid-priced hotels is saturated in some areas, it will gain from increased demand in other segments. Occupancy and meeting-planning is projected to meet or exceed expectations in upscale environments. At a minimum, the data and trends strongly suggest the Hotel Asset Manager can see cycles not easily seen by others. If we are assuredly into year two of a 7 to 10 years success cycle, the potential hotel investor needs a hotel asset manager who can evaluate the value of buy, sell, or hold.
