Investment approach
How an investor should select a hotel operator
A famous brand is not necessarily a capable operator; the decision depends on the asset, team, budget, contract and owner control.
A famous brand and a capable operator are not the same thing. The investor needs a team suited to the particular format, address, budget and project stage. Selection starts with a brief and comparable proposals, not a negotiation over one fee.
Prepare an operator brief
Include the building, confirmed room count, target guest, services, condition, CAPEX, intended opening date and limits of owner involvement. Ask each candidate to propose an operating model, staffing, channels, pre-opening programme, budget and contract on the same basis.
Test delivery, not the presentation
Request references for properties of comparable size and format, team composition, turnover among senior managers and owner contacts. Compare budget promises with actual outcomes where the information is available. Check the operator company's financial standing and structure separately.
Agree the governance system
The contract should define budget approval, bank accounts, procurement, hiring of senior managers, reporting, CAPEX, conflicts of interest and audit rights. Connect KPIs to action: listing RevPAR and GOP is insufficient without a comparison baseline and consequences.
A selection example
One candidate promises the highest RevPAR but does not show the assumptions and seeks wide powers. Another presents a more cautious budget, identifies the opening team and offers regular cash forecasts. The investor assesses the quality of assumptions, control and asset fit, not the highest number. Before issuing an RFP, decide on the model using the guide to management, leasing and owner operation; test metrics against DNPI's hotel KPI article.
RFP and reference checks
Send the same information pack and question timetable to every candidate. Separate operator commitments from forecasts and owner assumptions. Any change to room count, CAPEX or opening date should be made explicit so proposals remain comparable. Invite finalists to the property and a working session with the project team. This reveals whether they can link sales with engineering, staffing and budget rather than relying on marketing language. Record the meeting.
Take references from owners, not only the operator's colleagues. Ask about budget accuracy, candour over bad news, procurement control, opening, CAPEX and data handover. One successful flagship does not prove ability at another scale. A selection matrix should weight the team, relevant experience, business plan, contract, systems and financial strength. The lowest fee can conceal expensive central charges or weaker owner control.
After selection, confirm who owns each budget assumption, pre-opening costs and the contract timetable. Grant exclusivity only with clear deadlines and outputs; bind the proposed team or require consent for replacements. The final recommendation should record why alternatives were rejected and what risks the owner retains.
