Aligning the relationship
Pisani mentioned the impact of the global financial crisis on ownership trends, but while this may cause owners to tighten their hold over their investment, they were quick to refute the notion that the “ball is now in the owner’s court” when it comes to the balance of power between owner/operator.

“I don’t believe the ball is in anyone’s court, especially once a hotel is complete and fully operational,” says Scully. “What we might find is that due to the downturn and disrupted development schedules, owners won’t be forced into accepting inappropriate management companies for their hotels.

“I think management companies should be made more accountable when contracts are negotiated; this should certainly further protect owners’ interests,” he suggests.

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Atlas Hospitality’s Nierhaus agrees that owners have more choice, but says this should not mean they become too demanding.

“I do not think that owners or operators have an upper-hand in any cycle, even though I feel that in 2011, owners will have more choices and options. This is because operators currently outnumber demand and they are willing to negotiate to get additions in portfolio,” says Nierhaus.

“As an owner, winning a partnership with operators means sensible decisions, realistic expectations and definitely not the tendency to push your operator or pushing for demands that are unreasonable.”

Debare agrees: “As hotel owners and asset managers we are very involved in working alongside operators for the success of our hotels.  We work closely to provide guidance from an industry perspective and also a financial one. We seek to maximise returns and provide a focused, results-oriented overview that translates into value.

Ask the operator, however, and the view on who holds the power ball is different. For Wyndham Hotel Group president and CEO Eric Danziger, the owner has entrusted the operator with his investment and therefore, the owner is in charge.

“I have a contrary view to that statement, it should never be in cycles; the owner is always the boss. My customer in our business is the owner. Then there’s the consumer, which is the user of the hotel, but my success is directly tied to my relationship and ability to make an owner successful. I started as a bellman and I have worked in every position in a hotel, and I have always looked at it as the hotel company is an employee figuratively of an owner,” says Danziger.

“It’s not us and them; the power of ‘us’ is better together than as us and them. So I am deeply opposed to hotel companies thinking that they are ever in charge,” he claims.