How a hotel general manager and asset manager interact depends on a set of varied and unique skill sets.
Even though a Granny Smith and a Red Delicious are both apples, each has a distinct taste and texture. Much like apples, general managers of managed and owner-operated hotels “fall” from similar “trees” yet deliver different experiences. This analogy came to mind recently when asked to speak to hotel owners on best practices in GM recruitment and retention that align with overall investment goals.
Speaking in broad generalisations, it often used to be the case that the route up the ladder for aspirational GMs was through a succession of front-of-house positions. More often than not, the positions were in food and beverage before they were judged to have paid their dues and handed the keys to the building. More recently, a GM is likely to be found crunching data for a forthcoming spreadsheet presentation on last month’s revenue per available room performance as she or he is reviewing the chef’s latest menu. These days, the heightened demand for commercially and financially astute GMs sees more and more successful applicants coming from disciplines such as sales and revenue management.
Dig deeper, however, and it is apparent that, as with the Granny Smith and Red Delicious, there are different strains of GMs. We can broadly classify them as “management company GMs” and “owner-operated GMs.” The dynamic between ownership and operator has gone, and continues to go, through significant changes over the last 10 to 15 years. As expected, we have seen this impact the profile of the GM. The strategic focus on top-line revenue and management fee income naturally emphasizes a different set of priorities and skills than for the GM working on behalf of an owner to enhance underlying asset value.
These differences are borne out by the psychometric makeup of the individuals occupying such roles. Referencing data from the 2020 Skills psychometric assessment tool illustrates the variance in the GM profile. The tool measures three core areas of skillsets: task orientation, people skills and cognitive skills.
Owner-oriented GMs tend to be:
- More creative and strategic
- More socially sensitive
- More mentally positive and optimistic
- More conformist to the company’s long-term initiatives
- More proactive in service-orientation
Management-oriented GMs tend to be:
- More adoptive of a trouble-shooting mentality
- More transactional in people practices
- More “short-termist” in outlook
- More entrepreneurial and opportunistic in operations
- More reactive in service orientation
As the hotel brands have progressively gone asset light and the corresponding profile of their GMs has evolved, so too has the rise of the asset manager on the ownership side. The introduction of the asset management function around the world has come hard on the heels of the shift from hotel groups owning and running their hotels to becoming managers or franchisors of others’ hotels. Hotel asset management therefore is at its most mature in the North American market, where the distinctions between ownership, management and brand have been around the longest. In the European, Middle East and Africa region, asset management has only been a recognised function with dedicated professionals for the last 15 years or so. Heading toward Asia, the role of asset manager is still somewhat in its infancy but developing quickly. The membership of the Hospitality Asset Managers Association reflects this with a U.S. chapter membership that is three times the size of that in Europe, and several times that of Asia.
The asset manager’s role is to protect and maximise the value of the asset. This, therefore, requires taking a holistic view of the hotel and not only working with the management company to achieve optimal trading performance but also attending to those things that the management company may have no obligation to administer, such as the physical wellbeing of the property. In some ways, the asset manager helps to plug the gap in skills between a management company GM and an owner-operated GM.
As with apples and CMs, asset managers come in many varieties and each are unique to the profile of ownership (real estate fund/sovereign wealth fund/private equity/high net worth/REIT, etc.) and the particular strategic plan for the asset. Depending on the situation, an asset manager can be valued more for their financial analytical skills, operational expertise, or CapEx project management abilities. Well-developed diplomacy skills are highly beneficial due to the need to effectively manage relations between ownership and management, which, like all relationship, can at times turn fractious.
Having recently spent two days with a wide variety of asset managers at the HAMA Europe conference, I can attest to the depth of knowledge they possess concerning their assets and the sector in general. Their understanding of diverse issues, whether it be labour costs, the latest in revenue management tools, F&B concept trends, or energy-monitoring mobile apps, is only matched by the enormity of the passion they bring for the hotel business and the desire to create value. It is clear that the role is here to stay, and that the asset manager apple pairs well with the management company’s GM.
Chris Mumford is Managing Director of the London office of AETHOS Consulting Group, the global hospitality human-capital advisory serving the hotel, restaurant, casino, cruise line, club and travel technology sectors. Core competencies include executive search, compensation consulting, organizational development and psychometric assessments. With over 20 years of hospitality-related executive search and human capital consulting experience globally, Chris is particularly active in the Asia, Europe, and Middle East regions advising hospitality organizations on compensation, leadership and organizational issues while also facilitating senior executive appointments. Chris can be reached at firstname.lastname@example.org.
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