It is bold to claim that hotel asset managers have the most vital roles in the hotel industry, but they must know exactly the objectives of the owner, client or employer in order to oversee and boost the earned income and profitability on the services that generate hotel revenue. Hotel asset managers consequently drive value in three other critical ways—they bridge the knowledge gap between owners and operators; they are the owners’ eyes and ears on the ground; and they act as arbiters in resolving potential conflicts between operators and owners. Asset managers are therefore linchpins that align goals, communication and activities between operators and owners, and serve as critical catalysts for productivity and profitability related to an estimated $800+ billion of asset value within the U.S. alone.
For such critical roles, it is very concerning that the industry faces a major supply-and-demand problem: There are too few high-performing asset managers available to service the burgeoning hotel ownership community. It compounds the problem that the elite asset managers are also considering “career resets” that include moving to competitor organizations or leaving hospitality altogether to apply their expertise in adjacent industries. Many close to the issue claim this is just another challenge due to the pandemic, but this is arguably fallacious thinking. The limited supply of elite asset managers has been a problem in the making for the past decade, and hotel owners should take decisive action.
Owners normally source asset managers by tapping into the very small supply of proven talent versus adopting a more strategic view and approach. Fortunately, we can share some key learnings from our work with a few maverick organizations that are developing innovative programs involving: (1) long-term retention strategies for existing team members, and (2) creating a pipeline of new talent with transferable skills to asset management. There might not be an omnibus solution that fits all organizations, but a review of some emerging best practices should help owners to effectively rethink their current approaches.
Dr. Jim Houran Kingsley Gate Partners
Retention initiatives
As competitive compensation programs are the foundation of any successful retention strategy, hotel owners must have a clear understanding of how they compare to their competitive set. Kingsley Gate’s 2022 Hotel Asset Management Compensation Report provides comprehensive information for the hotel asset management community. The data was collected from June to August 2022 via a confidential survey of respondents who were employed by a diverse group of owners and advisory firms, including public lodging REITs, private equity groups, investment management companies, owner/operators and third-party asset management companies. A total of 192 participants provided their base salary, annual cash bonus, long-term incentive/equity grants, job title and property oversight responsibility.
For the purpose of this piece (see chart on page 18), we focus on VP asset management executives defined as follows: six-plus years of asset management experience with direct oversight of five-plus full-service properties. As job titles were inconsistent (from company to company), we carefully reviewed the work history of each respondent to ensure we are comparing apples to apples. For example, we believe traditional SVPs must have leadership oversight of a team of asset managers so are not included in the data.
While there were many retention strategy takeaways from our analysis, two notable findings involve long-term incentives/equity grants and property oversight, namely:
• 100% of the VPs working for publicly traded lodging REITs receive long-term incentives/equity grants. Conversely, only 28% of third-party asset managers and 20% of owner/operators provide a wealth creation mechanism leaving these organizations at retention risk with their VPs.
• Most of the respondents in our study who were positioned in the VP category reported property oversight of nine to 10 assets, an increase from pre-pandemic levels where the median property oversight was seven hotels. Hotel owners should keep a close eye on this trend, as we believe too much property oversight (per asset manager) significantly reduces their productivity and affects work-life balance objectives.
But we must note a crucial caveat here that we unfortunately cannot address in-depth due to space limitations. To high performers, competitive compensation models are not the only piece of the puzzle. Other critical aspects must be carefully considered and built into an organization’s retention strategy that is inclusive of performance recognition, suitable work-life balance and a proactive and structured program for professional development.
Creating a pipeline of skills
Because the hotel industry faces a paucity of qualified and available asset managers, it is critical for owners to invest in enterprise-level programs that identify, train and mentor a fresh pool of motivated talent, e.g., executives currently serving in other industry roles. On this point, we have worked with some dominant industry players to understand the success profile of elite asset managers and map it against alternative channels to efficiently pinpoint new candidates with the right attitude and aptitude for a role transition. These real-life applications have validated this success profile and our particular method of screening for it.
Candidates are usually selected for technical skills or personality traits, but we believe that the success profile is uniquely based on intrinsic values that drive the professional decisions and behaviors of elite asset managers. Capable asset managers obviously have a quantitative mindset and good communication skills, but this does not mean that they all “work” in the same way. Indeed, there is “what” asset managers do, and there is “how” they do it. Most hiring managers only consider traits or tendencies related to the “what,” but our psychometric research suggests that the “how” distinguishes the profile of elite talent.
Particularly, we aggregated the psychological results of top candidates from our recent executive searches and discovered a well-defined set of overlapping value-drivers. This involves an intricate array of 49 distinct professional work motivators as measured by Kingsley Gate’s proprietary Athena assessment, but we can summarize the profile via the three values of “IQ, EQ and TQ” (see Figure 1 above). Note that our sample of elite asset managers strongly exhibited all three values, not just one or two. Moreover, it shows a representative selection of secondary variables that help to form the three driving values.
First, IQ here is more than fixed or crystallized intelligence—instead, we mean “innovation intelligence.” This denotes analytical applications that are resourceful, entrepreneurial and supremely solution-focused. Second, most everyone understands EQ as the acronym for “emotional intelligence,” or the ability to understand and manage one’s own emotions, as well as to recognize and influence other people’s emotions. But the qualities defining this characteristic go deeper to include a consultative nature meshed with social savviness, nimbleness and influence. This all works together to spur a “highly productive generosity” with others. Third, TQ stands for “tactical intelligence,” i.e., accountable individuals with the resilience and determination to get things done in discrete and pragmatic ways, while maintaining a strategic view of their managed portfolio.
The tricky part is with researching and identifying obvious or “hidden” roles or industries with candidates possessing high levels of IQ, EQ and TQ. Some psychometric assessments can streamline these efforts, but we can share that illustrative roles with parallel success profiles include elite general managers at flagship, full-service hotels, or elite regional/district managers of these same assets. The correspondences are easy to see when you consider the impressive range of transferrable skills that are required to excel in these operator roles—leadership, organization, coordination, time management, communication, decision-making, recruiting, property operations, customer service and local market knowledge.
Stitching it all together
We only scratched the surface in this article, but the outcomes of our research and advisory work suggest that the winning strategy for protecting and building a pipeline of elite asset managers is a focus on “total rewards package + proper values drivers + proactive support with career progression.” And it is perhaps most practical and efficient to start with the first two components. Organizations supported by chief people and culture officers or the like clearly have an advantage in leveraging the insights shared here. Other businesses might require expert support, especially for handling the complexities and nuances of professional development programs. But no single component in this three-variable strategy can be ignored. The components work collectively to ensure that organizations recruit people with the right attitude and aptitude, and properly incentivize them and actively support their careers. In short, it is time for owners to approach the issue of asset managers as if they comprise the most vital role in the industry—because they might well be.
David Mansbach is a senior partner with Kingsley Gate Partners, a global executive search consulting firm, specializing in leisure, hospitality and other service-driven industries. Jim Houran, Ph.D., is an organizational psychologist, and VP/advisory services for the firm, where he facilitates KGP’s proprietary Synchronous Fit process for evaluating candidates.
