Third-party managers expand scope to solve owners’ challenges
Third-party managers expand scope to solve owners’ challenges
Management model shifts from tasks to tactics to help hotel investors outperform in today’s complex market.
https://www.hotelinvestmenttoday.com/From-Our-Partners/Third-party-managers-expand-scope-to-solve-owners-challenges?
By Mary Scoviak
PLANO, Texas ─ The next 12 to 24 months could sharpen the competitive edge of third-party management companies that have broadened their traditional approach to help hotel owners resolve today’s biggest challenges.
This slower growth, higher cost environment is the ideal testing ground for sector leaders to upskill from their former specialist status as pure operators to an integral role as full-stack consultative partners in the brand-owner-manager triad.
Their expanded scope answers hotel owners’ need for a co-strategist with in-house expertise to proactively unlock layers of opportunities and get ahead of problems before they hit the P&L.
The evolution toward fully integrated owner support gives progressive operators more levers to pull. That could be a pivotal advantage now as hotel investors are already navigating brand compliance, de-risking capital, harnessing costs, and protecting NOI without much near-term hope of cushioning from substantive pipeline growth or reduction in margin pressures.
More levers offset the bottom-line drain of RevPAR stalls
“Most people predict muted RevPAR growth for 2026 and 2027, especially as expenses — notably labor and construction — continue to rise,” said Justin Magazine, senior vice president, business development, Aimbridge Hospitality, the world’s largest third-party hospitality management company.
This dynamic has owners pressing operators to “help relieve compression in the middle of the P&L” without compromising guest experience or brand standards.
“Without the lift of rising RevPAR, this is where owners look to their operating partners and say, ‘Okay, what can you bring to the table to help this property, and my investment, be cash flow positive? Where can you move the needle beyond giving us a strong general manager, above-property operational support, and best-in-class sales, marketing, and revenue management?” said Magazine.
“Based on our perspective as an integrated solutions partner, the answer is, ‘everywhere’ ─ from the property level to enterprise scale,” he said. “Owners need their operating partners to get creative and work all the edges. And they need a company with the operational ingenuity and capital discipline to achieve guest satisfaction and performance goals.”
Economies of scale mitigate labor challenges
Labor management remains one of hotel owners’ biggest concerns – and one that Aimbridge is working to solve through its proprietary Shift Share platform and its team of market recruiters across 20-plus markets. In this challenging labor market, flexible management companies still have a series of tools that can give owners proactive control.
“When you have the scale and technology prowess that we do, you can really provide a benefit to owners by solving the problem of open shifts,” said Magazine. “Our owners don’t have to worry about open positions because we have the in-house ability to fill those hourly positions more quickly. A housekeeper can finish their shift at one property, check into our app, and see if there are any other shifts available within that market and go fill that shift at a different Aimbridge property.”
Standardized training also empowers hourly team members to move among the more than 80 global brands in Aimbridge’s portfolio. That capability creates a more dynamic workforce able to adapt to real-time labor needs without relying on overtime or cost-inefficient contract labor.
At the property leadership level, those same structural advantages benefit owners by tackling one of today’s biggest labor issues: high turnover of general managers.
“Close to 70% of our GMs have a tenure of more than three years,” said Magazine. Defined career pathways, both for upward mobility and geographic flexibility, serve as powerful retention drivers, reducing turnover costs, strengthening property-level stability, and keeping top talent on a long-term growth plan.
In-house experts play a critical role in cost controls and revenue growth
While labor may be the top-of-mind cost issue, owners facing margin pressures are looking for cost relief across the board. Aimbridge expanded its options for problem-solving and profit-building by leveraging the full range of operational, development, brand relationship, finance, asset management, and technical services at its global support center at its Plano, Texas headquarters.
This knowledge base enables broad-scope third-party managers to dig deeper to ensure every decision becomes accretive to owners, according to the Magazine.
“We can look at an owner’s profit goals from a capital management standpoint because our engineering department knows hotel systems so well that they can flag small problems before they become big problems,” said Magazine. “That gives the owner time to get ahead of capital needs. We’re protecting that owner’s investment because they’re not racing to fix a problem, and they won’t have to take rooms offline.”
It also allows Aimbridge to parlay its relationships into strategic drivers for lowering construction costs.
“A developer can come to us and say, ‘This is where I am in cost terms. These are the contractors I have. What are my options to make the numbers more economically feasible?,” said Magazine. “Our first question might be, ‘Are these the best contractors or subcontractors to have?’ Do we have better ones? If so, we typically can save that developer 7%-to-10% of the development costs while also shrinking the construction timeline.”
According to the magazine, scale also pays dividends when it comes to insurance planning. “By joining our umbrella property and liability programs, many owners are seeing double-digit rate reductions – savings they simply couldn’t access on their own. As we grow our portfolio with properties that align with our strategy, those additions strengthen the overall risk profile, enabling more competitive coverage for owners.”
Hands-on operator involvement streamlines owner, brand collaboration
In other cases, third-party managers’ increasingly consultative role can point to missed opportunities to generate incremental revenue or stop the leakage of underperforming spaces.
“We have a lot of owners and potential owners that are looking at their meeting space and their big ballrooms, especially in the large full-service hotels, and saying, ‘Do we need a large ballroom anymore? Does the market support this? Is this space what meeting groups are looking for these days?” said Magazine.
More highly integrated third-party managers can tap into cross-disciplinary expertise to show owners how to be more agile with underperforming function spaces. This leveled-up collaboration can generate new opportunities, new design options, and reprogramming scenarios that open a steady profit stream.
“Evaluating the potential of function space is a case-in-point example of what a manager with a broad scope can bring to the profit discussion,” said Magazine. “Before we talk about selling more event business, we first need to talk with the owner about whether having a traditional wedding ballroom in a secondary or tertiary market is going to deliver good ROI ─ especially if they have to spend significant money on a PIP.”
Situations like this reinforce the importance of third-party managers’ heightened involvement with hotel brands.
“Through our Operational Excellence Team, we're working with brands and owners to figure out how to monetize spaces that aren’t delivering ROI,” said Magazine. “The answer could be as simple as leasing it out or collaborating with a brand to come up with new programming. Or maybe we need to help the brand understand that a given property really doesn’t need to dedicate the full square footage required in the PIP because there are other hotels with larger, newer, better ballrooms. Groups in that market may not be looking for big ballrooms; they may want more executive experiences and smaller breakouts.”
In-depth engineering expertise empowers operators to advocate for owners on major line items where the PIP may need interpretation to fit an individual asset. On a recent PIP review for a full-service hotel, Aimbridge’s corporate support engineering team was able to demonstrate to the brand that the property’s current HVAC units did not need to be converted to VRF units, saving the owner over $3 million on the PIP.
How owners can unlock F&B revenue while controlling costs
That same expertise and activated partnership impact hotel operations and profitability. F&B is a case in point. It’s a vital tool when topline revenue is scarce, but razor-thin margins can easily flip it from asset to cost center.
“We ask, ‘Is there an opportunity to reprogram your F&B offering to make it more in line with the property, market, and guest?’” said Magazine, noting that Aimbridge’s involvement often begins at the development stage. A close eye on F&B venues and programming has translated into significant savings for developers by ensuring equipment purchases align with product and customer needs.
Operators’ tech focus puts owners ahead of the curve
On the commercial side, dedicated teams focus on shifting the share of bookings from OTAs to direct channels, while preparing to complement brand-level AI and LLM initiatives that are reshaping discovery and conversion. According to the Magazine, Aimbridge’s dual mandate is to understand how best to increase customer acquisition through direct bookings while differentiating properties, so they rank and resonate when travelers query for experiences, F&B, and neighborhood context.
“Hotel brands are leaning into AI and language learning models to grow direct booking, but, as a manager, we know we have to supplement their efforts,” said Magazine. “The question for us is, ‘How can we get creative on e-commerce?’ That’s where Second Wave comes in, our in-house, full-service marketing division. Second Wave has a strong pulse on AI optimization and does phenomenally well in getting our properties to the top of the web page as travelers search different engines to explore where they’ll book.”
Consultative operators will continue to redefine the owner/operator relationship
Ultimately, said Magazine, the increasing complexity of managing hotels will only continue to add to the value owners find in experienced and versatile third-party partners.
“Owners are looking for their operating partner to be a sounding board for all the different components we talked about, whether that’s renovations, PIPs, HR, brand conversations, or labor,” he added. Owners want that one-stop shop that can navigate their hotels through the back half of 2026 and 2027 if the forecasts for minimal growth are accurate. They look to us to pull every lever within their hotel to maximize their investment without sacrificing, and maybe even improving, the guest experience.”
Avoiding wellness tech depreciation
It is time for more developers to pivot toward a more financially sound model: structural, nature-integrated wellness.
https://www.hotelinvestmenttoday.com/Thought-Leadership/Contributed-Perspectives/Avoiding-wellness-tech-depreciation?
By Daryn Berriman
NATIONAL REPORT – The current hospitality development pipeline is heavy with a specific type of wellness programming. Driven by consumer interest in longevity, developers are allocating massive capital toward high-tech recovery machinery. Cryotherapy chambers, hyperbaric oxygen tubes, and diagnostic scanning beds are frequently written into the initial budgets for new luxury assets.
This represents a heavy reliance on Hard CapEx (specialized machinery and technology) rather than Soft CapEx (structural and environmental design). Assuming this heavy technology belongs in every luxury resort is a costly miscalculation. For properties outside of hyper-specialized clinical niches, it is time for developers to pivot toward a more financially sound model: structural, nature-integrated wellness.
Hidden OpEx
When a developer approves a massive allocation for specialized recovery technology, the initial purchase price is only the beginning of the financial drag. High-tech wellness assets carry brutal operating expenses.
First, there are the mandatory annual maintenance contracts. Medical-grade machinery requires specialized technicians for calibration and repair, leading to significant downtime when a unit fails. Every day a machine sits out of order, the yield per square meter drops to zero.
Second, this equipment requires specialized, highly trained labor. Operating a nitrogen-cooled cryo unit often requires certified technicians rather than standard hospitality staff. This drives up payroll and creates operational bottlenecks if that specific staff member resigns or calls in sick.
Finally, the depreciation cycle is relentless. The wellness technology landscape evolves at the speed of consumer electronics. The cutting-edge diagnostic bed installed today will be obsolete in 36 months, forcing ownership into a continuous cycle of expensive upgrades just to remain relevant.
Consumer behavior is actually reinforcing this financial case. Luxury guests increasingly seek the deliberate absence of technology to find a psychological reset, not more screen-based metrics.
Structural, elemental wellness
Instead of buying machines with motherboards, forward-thinking developers are fully embracing the Soft CapEx approach by building elemental, nature-backed recovery spaces directly into the architecture.
This focuses on the fundamentals of thermal and contrast therapy. It involves engineered cold plunges utilizing natural stone, expansive structural saunas with panoramic landscape views, and dedicated outdoor breathwork pavilions.
These environments deliver the exact physiological benefits guests seek, but they do so through architecture rather than technology. A beautifully designed structural thermal suite has zero moving parts to break down. It does not require a software update. Most importantly, it completely decouples revenue from specialized labor. A well-designed thermal circuit can accommodate 20 guests simultaneously with only a single attendant required to monitor the space and manage towels.
Financial comparison
Consider the real-world financial results from two recently completed 2,000-square-foot wellness hubs in the luxury resort sector.
Property A (a 2023 development) utilized a tech-heavy biohacking model. The initial Hard CapEx for cryotherapy, infrared pods, and oxygen therapy units was substantial. By year two of operations, the property faced punishing equipment maintenance fees and required three specialized technicians on payroll to safely operate the machinery during peak hours. When the primary cryo unit required a replacement motherboard from overseas, the resort lost three weeks of revenue for that specific space.
Property B (a comparable 2024 development) utilized a Soft CapEx, nature-integrated model. The developer invested the capital into the physical build out, creating a high-end commercial thermal circuit, deep natural stone plunge pools, and an outdoor recovery garden. The initial CapEx was 30% lower than Property A.
The impact on the Net Operating Income (NOI) for Property B was dramatic. The OpEx was limited to standard water filtration and commercial heating energy. The space required no specialized technicians, relying instead on standard spa attendants. Because the capacity was uncapped, the flow-through was exceptionally high. By year two, Property B was generating a 40% higher NOI than Property A, with zero capital required for equipment upgrades.
Actionable takeaways
For asset managers and developers finalizing programming for the years ahead, a few strategic adjustments will protect margins:
Audit the maintenance contracts: Before approving any wellness technology, demand a five-year projection of maintenance costs, required software subscriptions, and projected downtime. Factor these numbers directly into the expected ROI.
Design for uncapped inventory: Shift square footage away from one-to-one technology rooms and toward multi-user structural environments. A beautifully designed communal sauna and cold plunge circuit will always out-yield a single-occupancy diagnostic pod over a 10-year hold.
Leverage the environment: If your property has access to nature, monetize it. Shift the wellness footprint outdoors, where construction costs are significantly lower. A landscaped thermal garden offers a premium guest experience with a fraction of the structural engineering required for an indoor facility.
Wellness will remain a major driver of luxury bookings. However, delivering that wellness should not compromise the financial health of the asset. By embracing elemental, nature-integrated design, operators can deliver a premium product that fiercely protects the bottom line.
How consumer, economic shifts are changing hotel brands' approach in Europe
Guest experience, localization are more important than ever
From left: Marriott International's Neal Jones; TUI Group's Peter Krueger; Kempinski Hotels' Barbara Muckermann; Minor International's Dillip Rajakarier,; and Hilton's Simon Vincent speak at the 2026 International Hospitality Investment Forum EMEA in Berlin. (IHIF EMEA, Simon Callaghan Photography)
https://www.costar.com/article/1513912171/how-consumer-economic-shifts-are-changing-hotel-brands-approach-in-europe?
BERLIN — While there was once a period when travelers going abroad looked for some comforts similar to home while staying at hotels and dining, appetites have shifted to more locally authentic experiences, experts say.
Brand executives speaking during the "Trends in action: Leaders' perspectives on adapting to drive growth" session at the recent International Hospitality Investment Forum EMEA in Berlin said that highlighting local culture is now vital for international travelers.
"The biggest behavioral shift that you've seen in the last 20 years — particularly with Americans as they are still the largest population of wealthy travelers in the world — they have really shifted from a place where wherever they were going in the world, they wanted to really shield themselves a little bit from the local community and the local food and flavor," said Barbara Muckermann, group CEO of Kempinski Hotels. "This is what really started all the great brands you know that were really showing this shelter around the world. Now today, customers at every demographic level, from boomers down to Gen Z, want to throw themselves inside the destination. You now have guests that will try street food in Singapore, which 20 years ago was unheard of."
Peter Krueger, CEO of holiday experiences for TUI Group, said this shift has been driven by social media, where guests see more local experiences and want to put themselves into what they see.
"We say experience is the new luxury because people want to come to a destination based on specific experiences," he said. "So from a search perspective, people type in 'Give me the best diving spots in Africa.' They don't say they want to go to a four-star or five-star hotel."
He noted his company now sells roughly half of those types of experiences before the customer arrives at the destination.
While large international brands continue to look to grow across segments, more focus and energy is being put into the luxury side given that is where the best performance has gone in recent years.
Neal Jones, president of EMEA for Marriott International, noted, however, that more cost-conscious travelers are still spending where they see value.
"It might well be that a midscale customer is not spending as much as the luxury customer, but they're still spending more on experiences," he said.
He noted his group has been "fairly aggressive" in growing its luxury portfolio, while also focusing on "premium select and midscale."
Experts said there's also been a higher expectation for personalization in travel as artificial intelligence has grown more prevalent.
Dillip Rajakarier, group CEO for Minor International and CEO of Minor Hotels, said AI gives hotels a better technology base to deliver on the promise of experiential travel.
"That experience actually carries through from the time or even prior to booking ... to the post-departure experience," he said. "I think that's all customized so that we actually try to keep that guest within the ecosystem or at least within our loyalty system."
While the growth of loyalty programs has been a major focus across hotel brands, Muckermann said the industry needs to re-examine just what that term means.
She said loyalty in hotels can mean getting guests to choose your brands because they enjoy the experience of staying at them or it can mean creating a system where guests are recognized for staying within a specific ecosystem.
"The two behaviors at the core of it, for me, are different," she said. "One is recognition based ... versus a reward program."
Simon Vincent, executive vice president and president of EMEA for Hilton, said the large macro-loyalty programs such as Hilton Honors do have downstream experiential benefits for customers, and he noted that due to that large volume of data it allows them to collect, they are now "on the cusp of hyper-personalization."
"We have the ability, if you look at our CRS systems, property management systems, all of our tech stack is now in that cloud, and they can consolidate that data and make that accessible," he said. "I can't today guarantee to you that if you order a flat white in Spain, then you'll get a flat white in Bangkok, but I think that's coming."
He called using data to better serve specific guests across the globe the "secret sauce" for the large, tech-enabled hotel brands going forward.
"We're one of the few people that have kept that all in house, and I think that is going to be a major, major point of difference," he said.
Jones agreed that the large brand companies will have to lean into personalization more than ever before.
"You've got to be able to personalize the experience and the stay depending on what a particular guest is looking for, and every single customer is looking for something different," he said.
Iran war takes Middle East hotel performance down to lowest levels since pandemic
Saudi Arabia is faring better than United Arab Emirates
The west coast of Saudi Arabia has been less affected by the war in Iran, due to its distance from Iran and limited airspace closures. Shown here is the mosque in Jeddah's Al-Balad historic district, which has largely escaped destruction. (Getty Images)
https://www.costar.com/article/556025247/iran-war-takes-middle-east-hotel-performance-down-to-lowest-levels-since-pandemic?
Recent weeks have marked the most severe disruption for the Middle East hospitality industry since the early days of the COVID-19 pandemic.
What started as a noticeably busy February, with corporate travelers, meeting planners and family holidays compressing hotels across the region ahead of Ramadan, ended with some of the lowest occupancies ever reported due to the war in Iran.
Immediate impacts
On Feb. 28, the 12th day of Ramadan, the U.S. and Israel launched a series of coordinated strikes on Iran. Ahead of those strikes, regional hotel demand was already relatively soft, as domestic and intraregional travel slows substantially during Ramadan. For the seven-day period ending Feb. 27, countries in the Gulf Cooperation Council had reported year-over-year occupancy declines ranging between down 6% in Saudi Arabia to a 70% drop in Bahrain.
The situation changed immediately following the strikes. Countries across the region, including the United Arab Emirates and Qatar, immediately closed their airspace. With no way to complete trips, travelers flocked to hotels, and key GCC markets reported significant occupancy growth on the last night of February — a nearly 40% jump in Abu Dhabi and a spike of almost 70% in Muscat.
Repatriation flights, off-and-on airspace closures, and border closures continued to lift hotel occupancy for the next five to eight days as travelers moved out of and through the region in bids to return home.
Jeddah and Dubai highlight different regional impacts
The west coast of Saudi Arabia, including Jeddah, has been less affected due to limited airspace closures and increased distance from Iran. Jeddah hotels averaged 55% occupancy levels over the first 11 days of Ramadan, and after the initial eight days of conflict, settled at 57% through the remainder of the Holy Month. Stable occupancy levels indicate minimal impact from the conflict beyond the initial eight-day repatriation period.
Jeddah’s reliance on domestic hotel demand, as well as some degree of religious tourism due to proximity to Makkah and Medina, has helped keep the market stable as the conflict continues. More internationally driven markets have not fared as well.
Dubai — one of the world’s most popular vacation destinations and a regional hub for corporate travel — averaged 81.1% hotel occupancy in 2025 and 84.8% in the first two months of 2026.
With limited new supply on the horizon, 2026 was set to be another successful year for the UAE’s largest hospitality market. Hotel occupancy in the first two weeks of Ramadan surpassed 2025 levels, helped along by U.K. half-term holidays and other Western travelers.
Levels declined rapidly, however, following the initial burst of demand generated by airspace closures. Dubai hotel occupancy for the week ending March 14 sank to 22.8%, which was the market’s lowest level since the week ending April 11, 2020 (22.6%).
Dubai occupancy then moved to 28.2% the week ending March 21 because of the Eid al-Fitr holiday. Occupancy peaked over the weekend, averaging 42%.
Eid al-Fitr
The Eid al-Fitr public holiday ran from March 19 to 22 across most countries. International inbound demand remained extremely suppressed, but domestic demand helped lift hotel occupancy in some markets.
Saudi Arabia’s hotel markets topped the charts for Eid al-Fitr demand, in part due to the country's population. With more than 37 million residents as of 2025, Saudi Arabia is more than three times more populous than the United Arab Emirates, the second-biggest GCC country. Reliance on religious tourism in the West, along with fewer airspace closures and a higher propensity for domestic travel, helped fill Saudi hotels over the holiday period.
Hotels in the UAE's capital, Abu Dhabi, did not fare as well. Occupancy reached 47.7% for the four days, with a peak of 55.7% on Friday night. However, that represented a 45% year-over-year decline. Occupancy also dropped back below 40% on March 22, the last day of the holiday.
With domestic guests the primary source of hotel demand, geography affected hotel performance over Eid as well. Limited and inconsistent airlift made drive-to destinations the preferred option for Eid travel. For Salalah, located more than 1,000 kilometers from the Omani capital Muscat, attracting domestic demand was difficult. Hotel occupancy declined 88.4% relative to Eid 2025, reaching just 9%.
Pandemic comparisons
Hotel occupancy levels and declines have reached or even surpassed COVID-era lows across many markets. For Dubai, occupancy levels have hovered near pandemic-era lows, but year-over-year declines have been sharper. The bigger declines are caused by Dubai’s increased global popularity. At 90%, February 2025 occupancy was a full 5 percentage points higher than February 2019 occupancy, making a drop to sub-30% occupancy levels that much steeper this year.
Inventory levels are much higher today than in 2020. For example, Qatar has 47% more hotel rooms today than in 2020. However, the market did not fall to all-time occupancy lows because of reliance on long-stay guests, as well as short-term demand from oil field workers. At 42.1% during the week ending March 21 and 44.2% the week prior, Qatar’s hotel occupancy and year-over-year declines were less severe than in early 2020.
Demand type is the final factor to consider in 2020 comparisons. For markets such as Abu Dhabi, quarantine hotel rooms provided a steady demand source when “normal” travel was missing in 2020, which kept occupancy at 40.6% during the market’s worst days. Occupancy for the week ending March 14, 2026, fell to 39.5%. Abu Dhabi’s reliance on international business and leisure travel will severely restrict market demand until the war ends and airspace fully reopens.
The outlook
The last three weeks have proved to be some of the most challenging for the Middle East hospitality markets, and hotel demand across the region will remain extremely suppressed until the war ends.
While it remains too early to determine exactly when recovery can happen, Middle East market resiliency should not be underestimated. Hotel markets such as Dubai, Abu Dhabi, and Riyadh have rapidly expanded in global popularity over the past decade, drawing in scores of business and leisure travelers alike with increasing hotel supply to match.
The region made headlines in 2022 as some of the first markets to recover post-pandemic, and long-term investment into infrastructure, attractions, and marketing will serve these markets well in their recovery following an end to the conflict.
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