Today’s hotel industry
Over the years, the hotel industry has evolved into two basic organizational types:
* Hotel operating companies who run hotels but rarely have significant real estate holdings
* Privately or publicly held hospitality enterprises owning real estate
Many well-known hospitality companies like Hilton Worldwide, Marriott International, Hyatt Hotels and others may own few (if any) properties in terms of controlling the involved real estate. Similarly, many hotel ownership groups don’t take part in the day-to-day of hotel operations.
Only a few organizations work both sides of hotel operations. Some examples of publicly traded hotel groups include LaSalle Hotel investors and Pebblebrook Hotel Trust. Meanwhile, privately held companies, like Lubert-Adler or Colony Capital own various real estate groups, including some hotels.
Hotel perks make guests happy
In the hospitality business, we have this saying, “you don’t replace the carpet in the lobby when it wears out, you replace it when fashions change or when customer expectations change.” This adage is the definition of functional obsolescence (when hotels or other businesses no longer meet their customers’ expectations.)
Hotel managers are familiar with the constant pressure to keep properties fresh, and for facilities, services and other features to always meet customer expectations. We know that though a hotel may have adequate TVs, if they have only 12-inch screens—or other flaws—guests aren’t going to be incredibly happy.
Keep investing in customer satisfaction
Expect to make large annual reinvestments for room upgrades and to refresh hotel lobbies and restaurants.
It requires significant effort to manage daily hotel operations, particularly any investments needed to ensure a hospitality property’s image for years to come.
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