Operators & Hotel Management

According to a Proriat Hospitality Partners study, in 2020, hotels became the most popular foreign profitable real estate among European investors. However, hotels are not an easy business to manage. In addition to finding a suitable property, the greatest difficulty for investors is usually the issue of property management. Proriat explains how the hotel property is managed and how the profits are distributed between the owner and Operators or Hotel Management.

The owner can take over the management of the hotel on his own or hire a management company.

Self-management

If an investor is engaged in the hotel business on his own, then he needs to calculate in advance how much income he will receive and what costs to bear. Since the owner himself is involved in management, he does not share with anyone the profit remaining after paying taxes and maintenance costs.

• Main indicators: ADR (average daily rate)
• Average room rate, RevPAR (revenue per available room);
• Income from the rental of hospitality premises;
• Income from the rental of bicycles, boats, etc.;
• Income from the sale of food and drinks;
• Real estate capitalization

This scenario is not suitable for remote investors, as well as those with insufficient experience in the hospitality industry. In addition, only small hotels (B&B, bed, and breakfast) are suitable for self-management: many rooms complicate management, and in this case, you cannot do without a management company.

Hotel operator & hotel management

Usually, large management companies take over management only if the hotel has at least 70 keys.

Typically, the management companies are hotel operators, who hold the franchise of a large international chain. These companies manage and generate income.

There are two types of operators:

The branded operator takes over the management of the hotel. Such companies include, for example, Hilton, Hyatt, IHG, Marriott, and Starwood. Brand management contracts are usually signed with large hotels.

Independent operator

An independent operator is a management company that deals exclusively with management and does not provide a brand. For example, in the United States, the largest independent operators include GF Management, Interstate Hotels & Resorts, Pillar Hotels & Resorts, Pyramid Hotel Group, and White Lodging Services. Independent operators are usually companies and professional hospitality teams that create a win-win bridge between hotel brands and owners. Typically, these operators provide hotel management services to different brands.

There are many nuances in contracts that can be signed and terms that need to be negotiated. Therefore, the offers from hotel operators and independent management companies need to be compared, so you can choose the best option for your hotel.

You could submit your interest in finding hotel property at Proriat HoReCa Real Estate.

Looking for a management company to operate your hotel? Send us inquiries to Proriat Hospitality Partners.