RISE OF THE MANAGEMENT COMPANY: THIRD-PARTY HOTEL OPERATORS COME TO THE FORE
Multi-branded lodging companies, from Marriott International and Hilton to Hyatt Hotels Corp. and InterContinental Hotels Group, are leaning hard into asset-light strategies that favor franchising, an approach that generates fees with a lower cost base. The void, then, of operating assets has fallen more and more to third-party management companies (TPMCs), which hire, fire, oversee properties and answer to owners who care about one thing: profitability.
Though the connection between brands and TMPCs has always been competitive on some level, said associate professor of the practice and director of the real estate and innovation & entrepreneurship programs – Kaushik Vardharajan – at the Boston University School of Hospitality Administration, “It’s not the brand against the TPMC—each has a clear role to play and it is a symbiotic relationship.”