Transitioning from one management company to another typically costs an owner hundreds of thousands of dollars in disruption and hard Contributed by CHRIS RUSSELL , CEO , SPIRE HOSPITALITY , IRVING , TEXAS costs if not done right . Making the decision to switch
management companies isn ’ t easy for many owners , but sometimes a new perspective is exactly what is needed versus taking the path of least resistance and hoping things will be different .
While owners are less likely to switch from one management company to another when things are going well , the COVID-19 pandemic forced owners to step outside their comfort zones , as revenue plummeted overnight and the need for change became evident . Owners began reassessing their properties and reevaluating their agreements , one of which became front and center among industry executives – the thirdparty management contract .
Even though third-party operators are known for their flexibility and loyalty to owners , they ’ re classified as an expense on a property ’ s P & L , a necessary one in many circumstances ; however , finding the right one that understands the ownership side and is willing to structure a contract with an alignment of economic interests is critical to the decision . In other words , possibly a lower fee with shared upside in exceeding revenue and profitability goals typically is a win-win for both owner and management company .
Transitioning to another third-party management company may make sense , but not every third-party management company offers the same services for its fees . For instance , not every third-party management company offers construction and renovation services or branding and rebranding services , so another thirdparty management company may give you a bigger bang for your buck if you ’ re in need of those services . But switching can be costly if you don ’ t ask the right
66 hotelsmag . com September / October 2021