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Hospitality is all about creating and nurturing personal relationships between various stakeholders. However, there is one special relationship that a hotel management company must honour from the very start. That is between the company and the owners of the hotel.
As a management company, it is important to establish a strong and mutually beneficial relationship with your owners. Leading hotel management company, Cross Hotels & Resorts, has learned and practiced three key considerations for a successful business relationship between owners and hotel management company.
Transparency
Transparency is the foundation on which trust and success are built. From the very first meeting to the annual planning conference, it is important to communicate in an open, honest, and transparent way. To have a successful business relationship, there must be an alignment of long-term strategy and expectations that are shared and agreed upon from the very start.
Failure to fully understand the owner’s vision is the cause of most relationship failures. It is important to comprehend the owner’s vision, which may involve future generations, and for the owner to appreciate the implications of your own 5 to 10-year plan. Be transparent in your business dealings, as well as in the sharing and understanding of each other’s long-term strategy and motivations.
Owner’s Investment Strategy
Every owner has a unique investment strategy that goes beyond the standard term of the management contract. Understanding these strategies allows for more focused management and fulfilment of KPIs. Here are three common owner investment strategies:
- The Passionate Hospitality Hobbyist: The hotel is not their core means of income, it’s a status symbol. Finishes, reviews, and PR are more important than the bottom line.
- The Institutional Investor: Bottom line first, last, and always, followed closely by reputation.
- The Family Legacy: A property to be handed down through generations. Profitability comes into play not only as a prime source of income but also as part of the family’s legacy.
Owner’s Motivations
Owners tend to have longer time frames and broader aspirations that a corporate entity rarely shares. Some owners may not be motivated by money, although all like to make a profit. It is important to take time to understand an owner’s motivations, pain points, and what keeps them awake at night.
This is not a one-way street, and the owner needs to understand your motivations as well. This openness will strengthen the relationship and build that all-important trust. Once each party understands the shared needs, a strategy can be created that works for everyone.
By carefully considering these three points, a successful business relationship can be established between a management company and an owner in the hospitality industry. Although there are no guarantees of success, understanding the owner’s investment strategy and motivations, and being transparent in business dealings, can lead to better business relationships and profitability.
