The asset management process for a single asset is a process. It starts with determining the owner’s objectives for the asset and once the asset is acquired and integrated into the owner’s systems. Next, there is an extended period of monitoring the ongoing performance of the asset. Lastly, the asset manager facilitates concluding the investment in an orderly fashion.
Step one is determining the owner’s objectives. Without a thorough understanding of the owner’s objectives, the asset manager can not perform their role effectively. The asset manager becomes involved the instant an owner decides to acquire an asset. In this step, there is a pre-acquisition phase and an absorption phase. In the pre-acquisition phase the asset manager supports the transaction team as the asset comes into the portfolio. The asset manager is concerned with strategic considerations, such as highest and best use, and tactical considerations, such as capital expenditures, physical review, and a product improvement plan if the property has a franchise. The result is an asset management plan that codifies the plan for the property once it is purchased.
Next, the asset manager monitors ongoing operations. This is the phase where the asset manager has the largest role.In the end, an asset manager must be able to answer a key strategic question: is it more profitable to continue to operate the hotel, or to sell and redeploy capital to other opportunities? In other words, do we sell or do we continue to hold?To answer this question an asset management plan becomes the bible. Creating and updating this plan is continuous. taking into consideration the conditions within the overall market cycle, the condition of the financing markets, the overall portfolio strategy, and the place of this asset in pursuit of that strategy. All of these influence the asset’s relative position in the strategic asset management plan.
Next, one considers the owner’s investment criteria and their influence on the strategic asset management plan. These include the size of the investment relative to other investments in the portfolio, the desired holding period, the desired equity returns, the desired returns from cash versus returns from appreciation, and the relative risk of the asset.
The strategic asset management plan is informed by an enormous research and analysis effort, which results in the assessment of the property’s performance. First, a physical plant evaluation, and next, the asset manager evaluates the operations and management. This includes analyzing the historical performance of the hotel and assessing the strengths and weaknesses of the operator.
The asset manager performs a market analysis, a competitive supply of the market, the demand generators in the market, and the overall economic environment in which the hotel operates.
Finally one may perform an affiliation analysis. Is the property suitable for a brand affiliation? What services could a brand provide?
All of these evaluations feed into asset performance. Asset performance is measured by a benchmarking effort. An asset manger needs to understand both the existing and the desired market positioning of the hotel, the hotel’s market penetration the overall financial performance of the property both over time and compared to other hotels
The bulk of the asset manager’s job is devoted to ongoing monitoring of the asset’s performance and objectives. But it is crucial to frame that ongoing work. By constantly considering whether the asset should be sold or held, asset managers keep their ongoing analysis in tune with the financial needs of ownership.
For owners wishing to know more contact Mark at email@example.com