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How asset managers think the pandemic has changed their role

By January 19, 2023No Comments

Almost everyone in the hospitality Industry has been happy to forget the COVID-19 pandemic but it’s worth remembering how much of an impact it has had on job functions within the industry.

In the past asset managers might have been more detached from the day-to-day running of a particular property but the impact of the pandemic thrust many into the limelight with their roles now broader and more integrated into the business strategy.

Recently, Hospitality Insights heard from a number of leaders from within the sector as part of a roundtable discussion. Unsurprisingly one of the key areas covered was on the nature of the job, pre and post pandemic.

Habib Enayetullah, SVP real estate and asset management at Hilton, explained just how much had changed:

“I think the change in my career, and my role was really the pandemic. I represent an asset management function within an operating company like Hilton.

“So the focus has largely been transactional disposition, acquisitions of assets restructuring of leases dealing with owners.

“I think the pandemic really forced us to focus a lot more on operational issues, getting into the nitty gritty of how Hilton as an operator, was operating its hotels, revisiting cost structures, looking at various initiatives to do more efficiencies in a very tough operating environment.”

For Rastko Djordjevic, executive vice president and head of asset management EMEA at JLL, the pandemic also represented a big shift in behaviour:

“It required asset managers, to take a much deeper approach throughout the pandemic. It was restructuring operations but also making sure that when the hotels reopen is they ramp up, that we keep these high margins.

We were affected not only by the pandemic, but at the same time with a myriad of different factors, such as inflation, a very challenging labour market increasing energy costs. So I think what was great about this time is that the hotels manage most of them to navigate through this area.”

Since lockdown restrictions have eased across the world, many hotels have seen their average daily rate (ADR) outpace inflation but this has come with its own set of challenges as Djordjevic explained:

“If you are increasing your ADRs in a highly competitive market, you also need to look how you’re going to differentiate yourself and how you’re going to give this value back to the customer.

So in today’s market, in a lot of lifestyle hotels and a lot of innovative products, you also had to be a lot closer to defining your product, and it’s not just about reinvesting, renovating but also finding a way how you’re going to be in line with the trend and ahead of the concept, and being able to differentiate yourself, to provide real value to the customer and be able to justify the ADRs, which needed to be raised to offset everything else…”

Nick Chadwick, managing director in asset management at Starwood Capital Group, said:

“The business plans and execution have got more flexible. And as you go away from the traditional third party managed hotels with big brand management, it goes into a much more involved experiential product.

The scope of the investments we make are a lot wider, and so it requires a lot more flexibility of approach and it is very much a horses for courses approach which is what asset management is all about right. It’s coming up with the appropriate solutions to the appropriate hotel and piece of real estate that you’re dealing with.”

Bettina Graef-Parker, head of hotel properties at Aareal Bank, spoke about the role of asset manager from a banking perspective, outlining just how much the perception of the position had changed:

We, as a bank, have also recognized a lot more involvement of asset managers, and a lot more added value of asset managers throughout this period. Really. the deals that didn’t have an asset manager prior to Covid, they all of a sudden had asset managers, because there was a lot more that went beyond the usual.

Discussions you were having as an owner with the management company. So I think, in most relationships, unless you are a owner that is very hands on, and is willing to have all of those discussions with management companies, an asset manager is involved, and has become involved in places where we haven’t seen it before.

Hospitality Insights’ parent company Questex is one again so-sponsoring the HAMA Europe Asset Management Achievement Award, which will be presented at this year’s IHIF in May. More details on the award can be found here. The deadline for first round submissions is 8 February 2023.

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