hotel management fees
Management Company Compensation Slows in 2023
Robert Mandelbaum and Tim Dick | May 8, 2024
By Robert Mandelbaum, Tim Dick Prior research conducted by CBRE Hotels Research revealed that hotel management companies were rewarded handsomely as the U.S. lodging industry recovered from the COVID-19 pandemic. An analysis performed by CBRE in April 2023 found that total hotel revenue increased by 153% from 2020 to 2022, while Gross Operating Profits (GOP) grew by 437%. This resulted in a 68% increase in the fees paid to management companies and brought management fees back to pre-pandemic levels. The increases in fees were largely due to the improved performance of U.S. lodging properties, which in turn triggered the payment of incentiv...
A New Approach to Hotel Management Fees
Marcus R. Lee | April 26, 2024
By Marcus R. Lee In the ever-evolving hospitality industry, the question of how to effectively compensate hotel operators remains crucial. While the basic premise of paying managers for their management skills holds true, the prevalent incentive fee structures may no longer adequately align with market realities, particularly for owners. Management Fees Breakdown Hotel management companies earn fees through three main avenues: In the typical hotel management agreement, hotel management companies are typically paid a base fee equal to 2.0% to 4.0% of total operating revenue—3.0% being the most common—plus an incentive, typically an...
