Hotel Asset Management vs the Operating Company: Who Represents the Owner?

When a hotel owner contracts an operating company, many assume the company will take care of everything and that its interests and the owner's are identical. In reality, the two sets of interests are close but not always identical. That is why the hospitality industry developed the role of the hotel asset manager: a firm or individual that represents the owner in dealings with the operating company.

What is the difference between the two roles?

Aspect	Operating company	Asset manager
Who it represents	Runs the hotel under the contract	Represents the owner's interests
Focus	Day-to-day operation: guests, staff, service, sales	The value of the asset and the owner's long-term return
Time horizon	Monthly and annual performance	The asset's life cycle: renovation, repositioning, sale or expansion
Decisions	How the hotel is run	Is performance acceptable? Is the spending justified? Is the contract still suitable?

Why might interests differ?

Not because of bad faith, but because of how incentives are structured:

• If the operating fee is a percentage of revenue, the operator may have an incentive to grow revenue even if costs rise.
• The operator may prefer higher spending on renovation to maintain its brand standards, while the owner weighs this against the return.
• Decisions such as cutting rates to raise occupancy may help one indicator and hurt another.

The asset manager raises these questions on the owner's behalf.

What does an asset manager do?

1. Performance review: compares results with the budget and with competitors, and asks for the reasons behind them.
2. Annual budget review: discusses the revenue and cost assumptions before they are approved.
3. Contract oversight: checks that the operator complies with the contract terms and that fees are calculated correctly.
4. Capital expenditure decisions: assesses renovation and development proposals in terms of return.
5. Long-term planning: repositioning, changing the operating model, or selling.

Do you need an asset manager?

Not every owner needs an independent party. It may be enough to take on the role yourself if:

• You have one hotel or a limited number of properties.
• You have time to review and discuss the monthly reports.
• You understand the key indicators and the contract terms.

You may need someone to represent you if:

• You have a portfolio of properties or a large investment.
• You do not have the time or experience to review the operator's performance.
• You are an investor from outside the sector, or you represent a group of owners.
• The contract is complex or long-term.

How to take on the role yourself

If you decide to represent yourself, these are the essential tools:

• An agreed monthly report: occupancy, average rate, revenue per available room, net operating income, and comparison with the budget. See hotel performance indicators.
• A regular meeting: to discuss variances from the budget and their causes.
• Cost review: the largest line items and how they change. See hotel operating costs.
• Audit right: a contract clause that allows you to review the accounts. See the hotel management and operating contract.

How do the two roles work together without conflict?

A healthy relationship between the asset manager and the operator is collaborative, not just supervisory:

• Agree on the indicators and the report format in advance.
• Agree on the limits of authority: what the operator decides alone, and what needs the owner's approval.
• Discuss the reasons, not just the numbers.
• Avoid interfering in day-to-day operation as long as performance is within what was agreed.

Frequently asked questions

Is an asset manager a substitute for an operating company?

No. The operating company runs the hotel day to day, while the asset manager represents the owner and follows performance and major decisions.

Can the operating company also act as the asset manager?

That is difficult, because the asset manager reviews the operator's own performance. So it is usually an independent party or the owner themselves.

Do I need an asset manager for a small hotel?

It is usually enough to take on the role yourself, with clear reports and regular meetings, unless your time or experience does not allow it.

Next step

If you are reviewing your relationship with your operator or weighing your options, you can contact the Mirada team.