A Hotel Management deal is like a marriage. The first stage of choosing a partner often involves the emotions, and inexperience can only increase their potency. It takes time to learn who, and how, to trust – and in this regard the same is true for hotel owners. It’s easy to be seduced by a slick management proposal, but in the end the arrangement has to make business sense.
Next comes a word of caution: hotel management agreements are not all about fees. Of course, fees are important, but when they’re lower than you expect – or sometimes when they’re higher than you expect – there’s usually a reason and it rarely works out in your favor. When the numbers seem slightly off, that can be a warning to proceed with caution – so make sure you take advice from industry professionals who have your best interests at heart.
Given the potential for things to go wrong, how should hotel owners go about things the right way? Here are six key ideas from industry experts, Nova Asset Management.
Remember when we compared management agreements to marriage and romance? Happily ever after might be the dream, but preparation, due diligence, and adherence to sound advice are the best way to live that dream.
If you need to renovate your bathroom, a trip to IKEA and a week of DIY makes perfect sense. If you need to renovate your hotel, be aware that the same principles do not apply. A renovation project can cost anything from 50,000 baht to a million baht or more per room, and poor strategic decisions can send that bill spiraling even higher while extending the timeframe from weeks into months, and worse.
Is it feasible?
How will it look?