Defining the New Metric: What does true Operational Asset Management Truly Look like
Article 2 of 5 in the Series: Reimagining Hotel Asset Value
I. Moving Beyond the Mandate: The "What" of Operational Excellence
Article 1 established the transformational necessity of shifting from passive financial oversight to proactive engagement. The crucial next step is defining what this operational focus entails, what it delivers, and what makes it fundamentally different from traditional asset management.
Operational Hotel Asset Management (OHAM) is not simply about being "hands-on." It is about embedding a strategic mindset and a systematic, data-driven and experience-based approach to every element of the value chain. This shift, typically championed and executed through executive consulting by a seasoned operational expert, changes the focus from monitoring historical performance to engineering future profitability.
The core difference lies in the deliverable. Traditional asset management delivers reports; OHAM delivers development and structural performance improvement. Traditional asset management is rear-facing, OHAM if forward looking. This is a transformational shift in the fiduciary duty owed to the owner, moving the primary goal from compliance to active value creation.
II. The Five Key Deliverables of Operational Asset Management
The executive consulting blueprint for OHAM focuses on five specific, high-impact deliverables that directly affect the Gross Operating Profit (GOP) and the asset's overall valuation.
A. Strategic Commercial Alignment (Revenue & Sales)
What it delivers: A unified commercial strategy that aligns revenue management, sales, and marketing under the owner’s financial objectives.
OHAM Approach: Consultants don't just review RevPAR; they challenge the entire market segmentation, distribution channel strategy, and pricing integrity. This ensures that every booking is optimized not just for revenue, but for maximum profitability (GOP flow-through). Consultants want market data and possibly benchmarking information.
Keyword Focus: This requires rigorous organizational alignment and leadership that walks away from departmental silos.
B. Expense Optimization & Flow-Through
What it delivers: Sustainable cost reduction and improved GOP flow-through achieved without negatively impacting guest experience or employee engagement.
OHAM Approach: This is a zero-based approach to every expense line, from utilities and procurement to labor productivity. Executive consulting brings specialized expertise in benchmarking labor standards and identifying opportunities for efficiency development that property teams often overlook due to ingrained routines.
C. Transformational Leadership & Coaching
What it delivers: A high-performing, accountable property leadership team capable of self-sustaining operational excellence.
OHAM Approach: Consultants act as mentors, providing direct coaching and targeted development plans to the General Manager and executive committee. The goal is to cultivate transformational leaders who view themselves as asset stewards, ultimately reducing the owner's reliance on continuous external support. The main metrix shifts from RevPar or GOP to the flowthough, aka profit conversion/loss containment, i.e. how good a team is in converting extra revenue into additional profit for the owner, or alternatively how good a team is in managing loss of revenue and manage expenses so that expenses do not remain fixed in adverse conditions.
D. Asset Development and CapEx Strategy
What it delivers: A prioritized capital expenditure (CapEx) plan designed explicitly to drive return on investment (ROI) and enhance the asset's market positioning (ahead of a potential exit).
OHAM Approach: Capital spending is treated as a strategic investment, not a maintenance necessity. OHAM determines what CapEx projects will achieve the greatest bump in guest ratings, competitive advantage, and ultimately, asset valuation—focusing on ROI rather than just replacement cycles.
E. Organizational Culture and Talent Management
What it delivers: A strong, performance-driven organizational culture that fosters high employee engagement and reduces costly turnover.
OHAM Approach: Consultants diagnose the root causes of staff dissatisfaction and implement targeted solutions (e.g., streamlined onboarding, clearer career paths). High engagement directly lowers labour costs and dramatically improves guest satisfaction scores, providing a dual boost to the GOP.
At Orizon Advise we published before on the triangular relation between owner-staff-customers.
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III. The New Performance Metrics: What Success Looks Like
Operational asset management demands a different set of Key Performance Indicators (KPIs) focused on causation rather than correlation. The "what" is defined by these new metrics:
By tracking these leading indicators, executive consulting provides real-time oversight and can make mid-course adjustments to the transformational blueprint, guaranteeing that the asset remains on track toward the highest possible valuation.
Beyond the simple fact-checking once the periodic numbers have been documented, OHAM focuses on the understanding of all the factors that have caused the numbers to be what they and look forward at how to consolidate achievements or correct variances.
Some examples :
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IV. The Transformational Power of Executive Coaching
The most crucial "what" that executive consulting delivers is not a report or a tool, but the coaching of people, creating the "mindset". The transformation only becomes permanent when the property leadership adopts the operational mindset.
This involves:
Skill Transfer: Teaching GMs the financial analysis skills of an owner. Make sure the exec team also understands this viewpoint. The team as a whole then transform this understanding in their leadership.
Accountability: Establishing clear, non-negotiable standards for performance and compliance. Make sure a robust reward system is based on profit conversion/loss containment and extra profit generation and not just on achieving quantitative KPI’s.
Cultural Embedment: Ensuring the new organizational culture of performance and accountability is led from the top, resulting in sustained employee engagement.
This is the ultimate deliverable: a hotel asset that is not just performing better, but managed better—a key selling point that drastically increases its value to sophisticated institutional buyers. It’s also about creating a team that is able to handle changes in the economical landscape.
Ready to Align Your Hotel's Performance with Its Potential?
Understanding what Operational Asset Management delivers is the first step; implementing the necessary transformational change is the next. Our executive consulting team specializes in defining, delivering, and embedding the rigorous organizational and leadership structures required to maximize your asset's GOP and long-term valuation.
Don't wait for the next quarterly report. Define your future now.
Initiate a Strategy Call on Operational Excellence
This article is the second in a 5-part series by Orizon Advise dedicated to defining the necessary transformational shift in hotel ownership strategy.
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