Hotel asset manager compensation fair, but should be higher for some, says AETHOS

A new study out by AETHOS Consulting Group illustrates compensation for hotel asset managers, and high-performing, SVP-level asset managers may have a case for making more.

The AETHOS study included more than 200 responses from four buckets: public real estate investment trusts, hotel owner and operators, hotel management companies and hotel advisory firms. Participation was within the past three months and annual bonus data represented the last bonus an employee received. The numbers are broken down into three categories: base salary, annual bonus and total annual cash compensation. They do not include a longterm incentive piece, which could include restricted stock, profit sharing or ownership interests. 

The study was helmed by David Mansbach, managing director at AETHOS, a global hospitality advisory firm servicing many travel-related areas, including the hotel space. Overall, Mansbach said compensation was "fine" for average asset managers, but "low" for some. "A-plus players who oversee maybe seven complex full-service hotels, that are moving RevPAR more than two to three points, I think they are getting paid extremely low numbers," Mansbach said. "Whether it's putting caps on what high-performing asset managers make, or tying them more to company results rather than their portfolio results, it makes it low play for the A-plus players."

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Mansbach said he decided to chart the compensation of hotel asset managers because he sees the vocation as one of two of the most in-demand positions in the hotel industry along with revenue managers. (AETHOS last year performed a revenue management compensation report.) And while asset managers are in demand, it's the dearth of available candidates that worries Mansbach. He partly blames the industry for the scarcity and cultivating talent. 

"The industry has done a poor job creating a succession plan and leadership programs for the next generation of asset managers," he said. "There is an inability to promote from within."

Mansbach said that a common scenario is that when an asset manager leaves a company, there is less "pulling someone up from an analyst role in the organization" and more "we need to pull someone in from another organization."

The transparency of the numbers, Mansbach argues, is not a disservice to hiring companies, but rather should serve as a wake-up call. "My better clients are ahead of the game," he said. "Their people aren't coming in and saying anything. It's the the reactive ones who have an obligation to the industry to make sure they are competitive when it comes to pay. It will hurt them in the long run.

"You want to make sure your asset management team is compensated appropriately. You will be exposed if someone leaves."

The asset manager is a unique skill set, a position whose core responsibility is to serve the fiduciary concerns of the hotel's owner. They are, as Mansbach calls them, asset preservationists. The problem is that the vocation is even more nuanced today and there are only a small amount of expert-level asset managers working in the hospitality industry today. Mansbach said that there are only about 135 average- to high-performing asset managers plying their trade in the U.S. today.  

The real challenge is fostering new talent, which Mansbach said there is a lack thereof. "There is a need for the next-generation of talent," Mansbach said, asking what the colleges are doing to fill the gap. "In five to seven years, with VPs and SVPs retiring, there will be a significant shortage."