How good are your hotel asset management basics concepts?

What if I told you that asset management is like a barometer.

You know, the one that measures weather conditions.

You are giving me those looks.

As a manager, you regularly do think about your hotel performance.

However, how often do you think of the hotel as an investment?

I mean, treat the hotel as an asset that needs to deliver the best return of investment to the owners.

Or are you skipping this critical process?

What if you could quickly look at some key metrics of hotel investment performance?

Like the kind you look at regularly with the barometer.

And keep yourself abreast of your progress against say investment targets.

Let me now ask you a question.

Barometer Metaphor & Hotel Asset Management

Why do you consult a barometer?

So that you can check on some key readings for the weather in your area.

For example

• what is the pressure of the atmosphere?
• Is there any fluctuations in atmospheric pressure?
• Are there any storm warnings and so on.

The idea is to measure status along with some important indicators.

Well, your hotel assets also have their own set of metrics to watch out for.

In particular, metrics that measure asset performance.

This is something your owners are focused on.

But the question is: are you regularly reading those measures?

If you are not, you could be seriously losing out big time.

Let me explain how.

Before that, take a look at the infographic below on the Ultimate Guide on Hotel Asset  Management.

This Blog Post will answer questions like:

• What is Hotel Asset Management?
• How can you analyze asset performance?
• What are key basics of Hotel Asset Management?

and more.

Why Should You Care about Asset Management?

So, what is the big deal about asset management?

Why should you care?

Great questions.

Let me clarify.

Would you not want to know if your hotel’s investment performance is falling behind?

Or worse, some alarming signs are showing up?

Imagine if you get a nasty surprise when the month’s investment performance is revealed.

It would be quite embarrassing, right?

These are good reasons why you should be on top of investment performance measures.

Hotel Asset Management has the ability to provide you those status indicators.

Once you get used to these asset based metrics as they are often known as, you will never let go.

KPIs are incidentally acronyms for Key Performance Indicators.

Let us see what basics of asset management are.

And how you can utilize them for asset performance updates.

What is Asset Management?

So, what is asset management?

Asset Management is at the heart of a hotel's return on investment strategies.

Harness these techniques to take your asset management strategies to the next level!

Asset Management broadly covers three areas which are laid out below:

Asset Management deals with:

• How a hotel acquires its assets?
• What are ways a hotel utilizes its assets and 
• How a hotel asset performs

Acquiring an asset is directly related to its revenue producing potential.

Utilizing an asset means how well it is used to produce the highest revenue.

Asset Performance is all about what return on investment it delivers to the owners.

Want to learn more about the fundamentals of Hotel Asset Management?

Click below for a preview of the Hotel Asset Management Basics Course coming soon...

Chapters in this Ultimate Guide on Hotel Asset Management

This Ultimate Guide is a six part series which will cover the following key areas:

• CHAPTER 1 of 6 - Hotel Asset Management - Why should you care? [This Post]
• CHAPTER 2 of 6 - Hotel Asset Management and the Operator Focus [Next Up]
• CHAPTER 3 of 6 - Hotel KPIs and the Asset Manager Focus
• CHAPTER 4 of 6 - Hotel KPIs - Why the Asset Manager Focus Wins
• CHAPTER 5 of 6 - Room Inventory - a Hotel Asset Management Challenge
• CHAPTER 6 of 6 - Hotel Asset Manager Review - What does it cover?

Hotel Asset Performance Metrics

At the end of the day, it is important to get a hang of your hotel asset performance.

Rather like the barometer we talked about.

So, how do you get to feel the pulse of your hotel asset performance?

Great question.

Broadly, hotel asset performance metrics will address the following areas:

• Asset Capacity Metrics
• Asset - Business Volume Metrics
• Asset - Price Metrics
• Asset - Revenue Metrics
• Asset - Expenses Metrics
• Asset - Profitability Metrics
• Return on Investment Metrics

This is certainly not an exhaustive list.

However, these are the most commonly measured hotel asset metrics.

Then you could also categorize based on:

• Big Picture Overview
• Individual Focus

Big Picture Overview Hotel Asset KPIs are those that cover the entire hotel operation.

For example, Market Share is a hotel KPI that measures a hotel’s standing in the market it operates.

While there are different ways to calculate what market share is, the concept is about the big picture.

Market Share includes some hotel KPI categories which we saw earlier like business volume, price etc.

Profitability Hotel KPIs measure the end business result of a hotel operation - the bottom line.

For example, Profitability KPIs include many individual area hotel KPI categories like

• revenue,
• expenses,
• capacity and so on

which we listed earlier.

So, that is the reason hotel asset performance metrics are not all made the same.

It will depend on what your goal is in measuring hotel asset performance.

Moreover, you need to understand what are known as performance triggers.

For example, hotel revenue is contributed by 3 broad triggers:

• Capacity (represented by Available Rooms)
• Business Volume (represented by Occupancy)
• Price (represented by Average Daily Rate)

That should be a good overview on hotel asset management basics.

Next Week

We will dive into the world of Operator Vs Asset Manager.

We will see:

• What is the role of an Operator?
• What is the role of an Asset Manager?
• What is the difference and why is it important?

and more…

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