Last Updated: January 2024
As a rental real estate investor, you may be considering investing in a hospitality property. If so, it’s essential to understand the ins and outs of hospitality property management. Since most hospitality properties operate 24 hours a day, 365 days a year, having the right property management team and systems in place, is of great importance to ensure the property is successful. Below we take a deep dive into everything you need to know about managing hospitality properties.
Hospitality Property Management Defintion
Hospitality property management is a specialized type of real estate management that deals with the comprehensive oversight of operations for hospitality-related properties such as hotels, resorts, and restaurants.
Independent vs Franchise Hospitality Properties
Hospitality properties are usually divided into 2 distinct categories. Independent properties are those that are not linked to any larger chain or brand, allowing for unique guest experiences and greater operational flexibility. On the other hand, franchise hospitality properties are part of a larger network or brand, benefiting from established standard operating procedures, robust marketing support, and strong brand recognition.
20 Common Hospitality Property Management Services
Although there are many different types of hospitality properties, the primary goal of hospitality property management is to ensure that guests of the property have a positive experience from the moment they arrive at the property until the moment they check out. Whether the management services offered are select service, or full service operations, this includes everything from managing the property’s physical appearance to addressing any guest concerns or complaints. Below we take a look at some of the most common hospitality property management services:
- Guest Customer Service
- Booking, tickets, and reservation management
- Implementing and managing customer loyalty programs.
- Property Operations
- Coordination of special events or activities.
- Property Marketing and Advertising
- Market research to stay competitive and meet guests’ changing needs.
- Liaising with travel agents, tour operators and other third-party planners
- Quality control to adhere to brand standards (franchise properties)
- Rate management (Market Pricing adjustments)
- Revenue Management and Budgeting
- Accounting (Accounts Payable, Accounts Receivable)
- Staff Recruitment, Development and Human Resources
- Food and Beverage Management (Inventory and Staff)
- Vendor sourcing and management for food and beverage supplies.
- Safety and Risk Management
- Handling permits and licenses for special activities.
- Facility Maintenance and Property Upkeep
- Implementing sustainable practices, like energy-saving initiatives or recycling programs.
- Managing transport arrangements, such as airport transfers.
Hospitality Property Management Fees
The fee to manage a hospitality property can range between 3% and 6% of the gross operating revenue, depending on the type of property and terms of the operating agreement. Most contracts to manage hospitality properties are made up of 2 components – a base fee and an incentive fee, which is paid based on a certain percentage of revenues. These incentive fees are designed to make the onsite management more conscious of the property’s bottom line.
Hospitality Management Software
Hospitality management software is the invisible force that helps hospitality property owners, managers, and guests enjoy a seamless experience from beginning to end. Rather it be a hotel check in, theme park POS or event venue center financial reporting, the right real estate software can bring immense value to your property.
Hospitality Property Management Jobs
Hospitality property management requires a team of experts. From housekeeping and property maintenance staff to front desk and food & beverage employees, it takes a team of experts to properly manage a hospitality property. A good property management team will have a deep understanding of the hospitality industry and will be able to utilize the strengths of each team member to provide the best possible guest experience. Due to the complexity of the hospitality industry, managing a hospitality property can be a complex and challenging field. From keeping up with the latest industry trends to managing a large and diverse team of employees, there is a lot to keep track of.
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Hospitality Property Management FAQ
Which is Better Management: Independent vs Franchise Hospitality Properties?
The choice between independent and franchise hospitality property management depends largely on the specific circumstances and goals of the property owner. Independent management allows for greater flexibility and control over operations, making it an attractive choice for those wanting to create unique guest experiences. However, franchise management (as seen among the largest hospitality real estate companies) provides access to an established brand, robust operational systems, marketing support, and often, a built-in customer base. Therefore, the “better” choice will depend on factors like resources, market positioning, and the owner’s willingness and ability to handle the complexity of managing a hospitality property.
How to Find Good Property Managers for a Hospitality Property?
Finding a good property manager involves researching and interviewing potential candidates or companies. Consider their experience, especially in the hospitality sector, their management fees, and their approach to key areas like customer service, maintenance, marketing, and financial management. Also, check references and online reviews to learn about others’ experiences with them.
What are Key Performance Indicators (KPIs) to Track in Hospitality Property Management?
Some critical KPIs in hospitality property management include occupancy rates, average daily rate (ADR), revenue per available room (RevPAR), guest satisfaction scores, and the cost of acquiring a customer (CAC). These metrics can provide valuable insights into your property’s performance and highlight areas for improvement.