What is a Hotel Operator?

By Gregory Autin
Managing director of AUTIN&Co (AUTIN GmbH)
6 min read 1 December 2020
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Hotel Owners
Investors in hotel property own the site and building as well as the furniture, fixtures and
equipment (FF&E) and operating supplies and equipment (OS&E) for the hotels. They
receive the return on the investment and bear the risks of property ownership.

The owners of the hotel businesses are the hotel owners, who occupy and use the hotel
properties and profit from their operation. The degree of management and control they desire
over the management and operation of the properties determines a hotel's business strategy
and operating model.

Developers typically exit development projects post-construction through their sale to real
estate investors, frequently using forward sales before project completion. Private-
equity sponsors common

Hotel owners often hire hotel asset managers to control and influence the decisions of third-
party operators. Where asset managers assist the owners in achieving greater involvement in
the management of their hotels, the owner remains passive with regard to operating decisions.

The investment in hotel properties largely depends on the investment structure and
vehicle. Real estate investment trusts (REITs) and private equity funds have led to significant
changes in hotel property ownership structures and the interest of institutional investors in
hotels.

The asset-light strategy is to hold a reduced portfolio of properties in favor of lighter

portfolios, achieved through franchising, sale-leaseback, and management agreements. It
allows hotel companies to develop and increase business with limited requirements for capital
and focus on fee revenues while generating higher returns on invested capital.

A hotel's business strategy establishes the form of property and business ownership and the
influence the owners have on property-level decisions and hotel operations. When hotel
ownership is separated from operational management, the resulting conflict of interest leads
to the agency problem.

Hotel Operators
In the hospitality industry, hotel owners are distinctly separate from hotel operators. While
the hotel owner is the owner of the hotel business, the hotel operator manages the business
and operates the property.