Interim Hotel Management – Part 2: When It Does Not Make Sense…

In the prior blog on this subject, the use of interim hotel management addressed the circumstances and typical users and types of assignments. In this part, situations are discussed where short term and temporary management can be more a liability than a solution. Several examples include: Interim Hotel Managementa) A hotel foreclosure by a Bank or Special Servicer of the Lender may incur significant costs and expenses, particularly where there is a lot of deferred maintenance and unpaid expenses. The monthly fees to continue operations until the property or loan is either sold or disposed in some other fashion could increase the debt load substantially. An auction in these circumstances may prove more cost effective and produce a higher return. b) Where Investors and Owners are planning a disposition and sale of their hotel or lodging portfolio, removing their own management could affect the performance where potential buyers will expect to pay less. This is especially true if they hire inexperienced outside managers who are not equipped with the savvy and expertise to either maintain or improve the income while the hotel is being marketed and presented to other interested parties. c) Certain Investors and Owners, especially chains and family dominated businesses, who buy additional hotels have a corporate culture and preferred way of managing their operations. This can prove counter-productive for a professional interim hotel management individual or group to coexist with for a short time. It can also impede the needed get-results-now that drives successful hotel takeovers during the acquisition phase. d) Operators looking to replace an on-site general manager or corporate manager may find that it is better to pull from other in-house resources to fill a senior management position. There may be personnel at other properties ready and available and with minimum short term impact if they leave for a month and more. This would also reduce any added expense since the salaries are already being paid by those other hotels. Whether you decide to retain interim hotel management outside your company or use existing employees, getting results over a span of weeks or a few months is very important when there is an absence of permanent on-site oversight. Look for our next installment on this series about the importance of a 90 day plan.