In the hotel real estate game, an asset manager either drives exceptional value or becomes the biggest obstacle to success. They’re the critical link between operations, commercial efforts, finance, brands, banks, and owners. Heavy is the head that wears the asset management crown.
NB: This is an article from Vikram Singh
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Let’s start with two hard facts.
Hotel Operations Are Getting More Expensive
Labor, insurance, and utilities are skyrocketing globally and drastically changing the economics of running a hotel. Labor costs have increased 20% to 30% since 2019, while insurance premiums have gone up 2X or even 3X for properties in some regions. Energy costs remain volatile, and tariff/supply disruptions have driven up the cost of everything from linens to cleaning supplies.
Chasing top-line revenue these days, while ignoring acquisition costs and the expense of servicing those newly acquired guests, is a race to the bottom. Every guest comes with incremental costs (housekeeping, utilities, amenities, wear and tear, etc). Then there are acquisition costs (paid media ads, OTA commissions, etc) that were needed to compete and capture demand in the first place. Margins are eroding top-line growth so much that even when revenue is up, it feels like you are building a sandcastle on the beach at high tide.
NOI Is King
I learned this lesson early from one of the industry’s asset management legends. Back then, I was obsessed with revenue growth, outpacing the competition, and celebrating top-line wins. During one project, we replaced a prominent brand at a major city-center asset and executed it perfectly. Revenues soared! I was flying high and then the AM told me something life-altering:
“Vikram, this business is all about NOI. Nothing else matters.”
The best asset managers understand that Net Operating Income is the only metric that truly counts. Vanity metrics like ADR (Average Daily Rate) and RevPAR (Revenue Per Available Room) mean nothing if they don’t flow to the bottom line. It’s like bragging about your gym session while eating a sleeve of Oreos.
Even EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) can be massaged through accounting tricks. NOI hits differently. It’s the unvarnished truth of operating performance; it dictates cap rate and terminal value. Rational buyers don’t pay for good vibes, top-line revenue, market share, or five-star reviews. They buy cash flow. Period.
Top 6 Traits of Great Asset Managers
Great asset managers operate differently. They are exceptional because they are:
1. Chief Troubleshooting Officers
When crisis hits (and in hotels, it always does), great asset managers don’t panic, deflect, or wait for someone else to fix it. They step in and make the right calls.
I’ve watched them operate during natural disasters, lender meltdowns, team implosions, and other crises that would paralyze lesser mortals. No finger-pointing. No useless committee meetings or elaborate emails …. just clear-headed decision-making under pressure.
When the proverbial “s*itstorm” hits, they manage the crisis, fix problems, and then position the property to emerge stronger on the other side.
