Apart from the specialised nature of the industry, the management of hotels is amongst the most highly labour-intensive businesses in the modern economy and contrasts manifestly to the capital-intensive real estate business. As such the structures and performance expectations of each are exceedingly diverse. Any organisation operating in real estate or looking to invest in hotel real estate should be particularly cautious regarding the stress of adding a hotel management division to their group, however this can be very much mitigated by the appointment of an hotel operator that can effectively handle the day-to-day business down to annual gross or net operating profit with very little input required by the real estate company.
Under most management contracts the operating company and therefore the employees of the hotel remain with the real estate owning company so internal hotel expertise will still a, though very much condensed or alternatively the owner can appoint a hotel asset management consultancy to oversee their interests. Generally speaking for inexperienced hotel investors or developer’s self-management under franchise or unbranded is discouraged but if the circumstances and market permit or necessitate this approach then ensure you engage experienced hotel consultants especially prior to and during the development process, appointing only proven experienced hospitality individuals in the key roles of the hotel organisation.
Assuming your project plan or hotel meets the prerequisite of feasibility, configuration and quality of the standards of an international hotel brand, the degree of control that you wish to exert over your asset is possibly the crucial factor in determining your engagement of a hotel operator, and under what structure or terms, you engage them. Typically, you would secure the hotel operator who also holds the brand rights within the region, but there are occasionally alternatives to appoint a ‘white label’ international or local management company that manage hotels on behalf of owners that have their property branded under a separate franchise.
See also:
What can a hotel operator do for me?
When should I engage a hotel operator?