Capital Hotel Management Receives Seven Property Assignments

The properties, owned by three different privately held groups, include a 175-room Hilton Hotel and conference center in Scranton, Pennsylvania, that is scheduled to be completed this July, as well as six upscale hotels in New York, Los Angeles, Washington, DC and Dallas. A spokesperson for the company declined to specify the exact location of these other properties.

The new asset management assignments bring the company's management portfolio to more than 8,000 rooms since its formation in 2000. The company says that the assignments reflect a growing trend among owners who seek asset management services as the hotel industry enters its third year of declining revenue per available room.

"Typically the institutional investor is a passive investor," Jerry Daly, a spokesperson for Capital Hotel, tells GlobeSt.com. Daly notes that after the investor gets a manager to operate the hotel and a brand for the hotel, it will need an asset manager to look after its own interests, noting that hotel managers are more oriented towards driving revenue than towards the bottom line. "The asset manager takes a look at what the brand manager and the hotel operators want and then says what is in the best interest of the owner," Daly points out.

As Daly says, a pension fund is usually going to diversify its real estate holdings with investments in apartments, malls and commercial space. But he stresses that the hotel business, where tenants basically re-leases every day, is an operating business with a different set of rules. The hotel business, he says, is very sophisticated and owners need someone "to be proactive." Typically, he adds, "this trend [towards hiring asset managers] grows when times are tougher."

Ken Wilson, CEO of Capital Hotel Management, LLC emphasizes that the fact that third-party asset management is on the upswing reflects a basic change in the industry. "Until very recently, owners still equated asset management to the insurance company model used in the pre-1991 hotel real estate collapse days where substantial departments were created to manage the financing rather than the hotel. In the past few years, the shift has moved toward aggressive asset management by an outside consultancy like Capital Hotel Management who can help maintain the delicate balance between owner, manager and franchisor, which ultimately drives the highest return on investment."