“Lodging properties aren’t commodities so it’s crucial to find management that has passion for the kind of hotel you want them to operate,” said CNL's Charlie Muller

Picking the right operator for your boutique or lifestyle hotel is all about relationships. Owners and operators need to be on the same philosophical page if the partnership hopes to succeed. That was a primary conclusion of a panel discussion during last week’s Lifestyle/Boutique Hotel Development Conference sponsored by Lodging Hospitality and HVS Hotel Management.

“You’re getting married,” is how IHG’s Tim Genovese summed up the owner-manager dynamic. “As a result, you had better have a ton of upfront communication before agreeing to work together. It pays to be selective on the front end rather than have to switch management companies later on and then wait for the new team to get up to speed.”

Ron Gilbert, president of Growth Properties Hospitality Management, thinks “dating” is a better way to explain how owners and operators deal with each other. “Both sides must be committed and feel as though they’re in the relationship together,” said Gilbert. “If you find the cultures are not aligned and you’re not on the same page, there’s nothing wrong with walking away.”

Experience is another theme the panelists—which included one owner and three operators—stressed as important in picking the right management company. “Owners should look for a management company that has experience in a type of market—urban, suburban, resort, university or whatever—rather than in the specific (geographic) market in which the property is located,” said Charlie Muller, executive vice president and COO of CNL Lifestyle Properties. “Lodging properties aren’t commodities so it’s crucial to find management that has passion for the kind of hotel you want them to operate.”

For boutique and lifestyle properties, in particular, Muller says it makes sense to work with management companies that have strong restaurant experience and are plugged in to the latest pop culture trends and styles.

Mike Marshall, president and CEO of Marshall Hotels & Resorts, suggested owners visit the offices of the management companies they’re considering. “It’s important the owner meets everyone he or she will be dealing with: revenue managers, controllers, VPs as well as the president of the company,” he said.

The group conceded that while the standard management fee structure (about three percent of revenues, plus incentives for gross or net profits) applies to most boutique properties, everything is ripe for negotiations.

“Most management companies are willing to look at arrangements other than straight fees,” said Genovese, who is vice president of operations for IHG’s upscale brands. “Often, that involves more reliance on incentives with defined thresholds.”