A lot goes into a hotel owner’s decision to partner with a third-party management company, and yet the bottom line is always the bottom line. Owners want consistent asset-value growth and know what indicators lead to it.
Over the last several years, I have worked with and for many management companies. As I have studied it, the reason many management companies have challenges with ongoing growth and client retention-saturation comes down to three business problems:
1 Unclear definition of who they are
2 Client communication
3 Market relevance
KNOW WHO YOU ARE AND OWN IT: “STOP BEING ALL THINGS TO ALL INVESTMENT GROUPS. WE DON’T SELECT THAT WAY.”
Understanding what your customers and the marketplace think of you is valuable information. It can lead you to strategic growth. When you talk to your customers, you gain access to all the information they care about. You learn what they value. You learn what they’re up against and where they see the market heading. It also allows you to see and anticipate where they see themselves going so you can go there with them.
EXPERTISE MATTERS: “I AM NOT INTERESTED IN FUNDING YOUR LEARNING CURVE.”
Not only do owners want a management company’s focus to be on them, they want its expertise to align with their varying needs. Owning a region or being an expert in primary, secondary or tertiary cities may be critical in one situation, whereas knowing a brand or how to operate an independent may be a priority in another situation.
Understanding the perception of your expertise and using your resources and new business development messaging can leverage your strengths to give you a consistent message, position your unique points of difference and allow you to grow in alignment with your organization’s wheel-house.
We all know that we cannot be all things to all people, and yet most management companies take that route. This may work in the short term but it causes havoc on a company’s resources, hampering its ability to deliver strong results effectively and consistently over time.
1 Perception is reality, so be sure you know how your owners (past and present) and the marketplace perceive your organization and its sweet spot.
* When your owners and the marketplace tell you what you’re good at, you know your message.
* When your owners and the marketplace tell you what you’re bad at, you know what needs to change or what deals are just not in your “wheel-house.”
2 Today, more than ever, management companies must differentiate themselves from their competition. If in talking to your customers, you find you can’t demonstrate ongoing improvement for certain asset types or markets, it is an opportunity to be more strategic and redefine your niche or make the commitment to double down on developing that expertise.
3 Every RFP is not an opportunity for you. Your owners can tell you. Your customers can tell you. Your consultants and analysts in the marketplace can tell you. It is time for today’s management companies to take a hard, objective look at how they are perceived by the marketplace. Don’t waste your time on capturing work you aren’t good at when you can gain work that aligns with your strengths and positions you for real growth.
COMMUNICATION: “WHO IS YOUR VOICE, AND DOES IT SERVE YOUR ORGANIZATION?”
All too often in third-party management, an owner’s strongest relationship is at the property level with the general manager, not at the corporate level. Because GMs are onsite, owners often feel they have access to the most accurate and timely information by going straight to the source. It may be true, and yet this dynamic may serve the owner and not you.
Management companies need to make client communication (what we, in sales, call “account management”) a priority. Your “go-to guy” must be at the corporate level where the relationship began. Paying fanatical attention to developing a confident and trusting relationship must be a top priority of your corporate operations team.
Processes must be in place to handle issues so the news comes through the corporate lead versus the property GM or, worse yet, some other entity. Monthly updates must be designed to support what the owner or owner rep must communicate to their stakeholders versus some cookie-cutter month-end recap. This month-end and overall communication strategy should be designed at the start of the contract and revisited once a year in a deliberate effort to ensure alignment of the asset’s strategic growth, as well as the priorities, results and potential challenges coming your way.
If an owner believes that a GM is better informed than the management company, the odds are the owner will see less value in the management company relationship and your contract becomes vulnerable. In addition, your GM will now be limited in his or her career growth as the owner will insist on the GM staying put—meaning you are likely to lose them both.
COMMUNICATION BY DESIGN: “LISTEN TO ME. TALK ABOUT WHAT I CARE ABOUT. CONNECT ON MY LEVEL.”
1 Design a communication strategy with every client and for every asset.
* Who at the corporate level “owns” each client?
* Who is responsible for ensuring each owner is happy?
* How is the communication going to be best received?
* What are the client’s preferences in terms of communication?
2 Hold one corporate lead accountable for the relationship, its communication and the asset’s results. Be fanatical about communication based on the owner’s needs, wants and expectations.
3 Have clearly defined processes on how information is communicated from the property to the corporate lead and on to the owner.
* What are the primary hot buttons and financial objectives that this client wants, and how will you know that the property team is aligned and working with them?
4 Getting the deal is only half the battle. Third-party management companies have to sustain effective communication on the corporate level and create processes for accountability to see long-term account success.
BE RELEVANT OR DIE: “IT’S ALL ABOUT ME!”
Understanding your market perception is what positions a management company for growth by helping to identify strengths, determine resource allocation and position accordingly. When you learn what your owners value most about you, you can align all of your strategies to target, support and dominate that niche.
If you ensure your clients’ relevance, you will not need to worry about yours. This puts you in a position when you no longer need to get on the RFP short list. You are the short list.