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By Kaitlin Dunn, Writer, Hospitality Sales & Marketing Association International (HSMAI)
Hotel asset managers and ownership groups have faced unique challenges over the past year and a half. With that in mind, HSMAI hosted its first-ever virtual Hotel Ownership Group Commercial Executive Roundtable on June 29. Asset managers from participating companies including Apple Hospitality REIT, Ashford, BRE, and Noble came together to share their thoughts on recovery and how they’re moving forward. Here are key takeaways from their discussion:
ON PROFITABILITY:
Participants pointed out that, among other changes post-COVID, there is a greater focus on profitability for managed assets than there was before. This has caused ownership groups to change their behavior. Here’s what participants said on the topic:
- “The environment has really surfaced the difference in priorities between an owner and a manager. A manager is incentivized off of total revenue and owners care more about profitability. And so, we see countless instances where there’s tension there. We’ve talked about that tension in the past, but it’s really come into light in this new environment.”
- “We’re finding it’s far more profitable to sell less rooms right now. So, we’ve really got a very different focus, and managing that balance between operator and owner and having everyone on the same page with their day-to-day tactics is so critical right now. In the past, we’ve been primarily motivated by driving occupancy and altering our behavior to increase those numbers, but we have to think differently.”
ON TALENT ACQUISITION AND RETENTION:
Securing and retaining high-quality talent is a priority not only for owners but for managers at every level of the industry. Here’s what participants had to say about successful talent acquisition and retention strategies:
- “Regarding the GMs that can pull together teams, it’s because they know a large number of individuals in the market and worked with them at other hotels. That also tracks on a corporate level. Our relationships have become much more important these past several months.”
- “We’ve always seen our workforce as a given, and it truly is a luxury right now to have an organization that is fully staffed, where staff come to work on time and are excited to be there. So, we’ve got to put a different level of value in our teams and make sure that we are managing our management companies to really do that, to promote the fact that they have high satisfaction within their organization.”
- “Retention is a result of the culture. The managers with the highest retention rates are the ones who have always held employee satisfaction at the highest level.”
ON SUPPORT FROM BRANDS AND MANAGEMENT COMPANIES:
Hotel ownership groups have received varying levels of support from management companies and brands over the past year. Here’s what participants said about both:
- “I think some brands were incredibly receptive to change revenue management systems at some point following the onset of the pandemic. It took some STR reports to materialize for them to understand that maybe the same strategy we’d always had was not the right strategy, but at some point, they caught up and I truly believe that that’s going to help us, even in a far post-pandemic environment.”
- “I think I found some management companies more willing to do certain things that brands haven’t, especially as it relates to brand standards and things like closing down. Where a brand may really care about customer sentiment, management companies care more about the brand value. Local management companies have been more focused on ownership bottom line whereas the brands would care a little bit more about certain other things.”
- “I think some brands cut marketing departments and haven’t quite figured out the right structure. They’ve added them back, but to really have a great discussion around marketing strategy is getting harder and harder post-pandemic. We’re hard-pressed to get good data and qualified feedback on marketing specifications.”
- “With some brands reducing a lot of their bandwidth, we’ve had to rely on ourselves more to help our management companies. We feel more comfortable now than we have been, and that’s because we’ve had to struggle through it. But I think as a result we’ve made ourselves better and I truly believe our managers would say that we’ve made them better as well.”
ON MARKETING AND MEDIA SPEND:
It’s up to owners to direct marketing and media spend, which participants said has been difficult recently due to multiple factors. Here are takeaways on that topic:
- “When it comes to spend, a challenge that we’re finding is that the visibility on sites like Expedia and the disconnect with inventory is creating an issue where if the hotel shuts down because they can’t clean a room, the ads still continue.”
- “We’ve all experienced the pullback of the resources at the brand levels and some management company levels. The optimization within the platforms that these campaigns are running is new and uncertain, and there’s not a lot of transparency into how the algorithms are determining recommendations on how much you should spend, so there’s a lot of just uncertainly on what’s the right budget.”
- “Some of the brands have had to pull back and/or shut down from a marketing standpoint. And as they’ve layered that back in, there still isn’t a clear line of sight into how much are we spending now? How much coverage are we getting? What do we need to do to supplement that?”