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Hotel management is the essential backbone behind overseeing the general operations of a hotel business. In many cases, these duties are distributed across a management team comprised of a general manager and other senior-level professionals. However, in other cases, the strategic operations of a hotel are handled by a third-party management company.

What’s a Hotel Management Company?

Like the internal team of any well-functioning hospitality business, a hotel management company is a third-party that’s responsible for managing the daily operations of a hotel, either for an incentive fee, a base fee, or a percentage of gross revenue. These parties can be onboarded at the hotel startup stage or long after a hotel has been in business.

If a hotel owner does not want to hire a general manager and other key staff members, they can choose to hire a hotel management company. In this scenario, the hotel owner makes a profit without having an integral role in the management and operations of the hotel.

Hotel management companies will sign a decade-long (or more extended) contract with the owner in most situations. This way, the third-party management company can establish a long-term vision and execute the work needed to staff the hotel without the short-term risk of losing the hotel as an account in the near future.

Advantages of Working with a Hotel Management Company

There are various hotel management companies that can either assist owners in running a hotel or run the hotel entirely. The common denominator is that these companies pinpoint what owners are doing right and what they’re doing wrong. Other primary advantages of working with a hotel management company include:

Of course, every situation is unique and contingent based on the contract terms and scope of the hotel management company’s role. In most cases, they will handle just about everything under the sun when it comes to operating a successful hotel.

Choosing a Hotel Management Company

When selecting a suitable hotel management company, consider the following criteria:

The role of a hotel management company has greatly evolved over the years and now takes many shapes. Decades ago, third-party management companies had a clear function as operators who handled day-to-day management services and organizational support in HR, accounting, marketing, etc.

In the current environment, there’s far more flexibility in the role that a hotel management company can fill for an owner, ranging from a specialized third-party operator to some form of equity partner. Some companies have particular expertise in managing exclusive resorts, others focus on limited-service properties, and others have particular competencies in operating hotels for colleges and universities. The key to determining the best management company for any particular deal is to identify a company whose skills and expertise match.

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