1. Why is there demand now for hotel asset managers?

Hotel demand is currently weakening in many markets, hotel profits are slipping and asset values are declining. Hotel owners
need to take aggressive action to restore or maintain balance, and assure that the operators fully understand and remain
focused on the owner’s goals. Currently most owners are making their mortgage payments, but it is not be always the case.
Even lenders are starting to hire independent asset managers to salvage problem properties that they came to own through
foreclosure.

2. How and when did the concept of asset management start - particularly in relation to the hospitality industry?

In the late 1980s and the early 1990s, the U.S. lodging industry struggled through the worst period of its history since the Great
Depression. The hotel overbuilding of the early 1980s collided with a declining economy and the travel slowdown resulting from
the first Gulf War, so equity investors and lenders turned to workout specialists to regain some fraction of the value they had
lost. This disaster control activity was arguably the single most important factor in increasing the prominence of the hotel asset
management function.

3. What are the advantages of employing the services of an asset manager?

Asset managers provide full oversight of the operation and physical asset, as well as maximize real estate value; however, as
the asset management function is highly owner specific, the scope of the assignment and the depth will vary dramatically from
property to property and from owner to owner. For instance, if the owner wants to sell the property, the asset manager will
prepare the property by completing renovations and working to maximize current profitability levels, thus enhancing the value to
the buyer.

4. What should an owner/investor look for an asset management company?

In my opinion, hotel owners should look for independent asset management companies: independent from traditional hotel
consulting companies to avoid conflict of interest (e.g. leaking of financial information), and independent from the owner to
guaranty complete objectivity and superior results.

These third-party companies are often directly tied to the oversight of a particular asset. They direct much of their attention to
maximizing current revenue, controlling expenditures, increasing value and sometime positioning the property for a transaction.
Beside the operational know-how, they should have extensive experience in the finance and financial consulting fields, and
valuation. After all how do you want to add real estate value, if you don’t know how to evaluate an asset?

5. How does an asset manager relate to the owner? to the operator?

Asset manager provides the information tools to ownership to make appropriate decision and assuring that the property is
handled and maintained as an investment. We serve as a counterbalance to the operator and ensure that they are managing
effectively the hotel, this includes: operational and financial review, approve and monitor capital expenditures, sales and
marketing. We make sure that the hotel teams understand the requirements and motivations of its owners with a focus on
profitability, cash flow and returns on investment.
For instance, when a hotel is doing well and hitting initial budgeted projections, that does not mean there are not areas of
improvement or opportunities that might be uncovered by the operator. Our performance expectations are to never be
completely satisfied until properties are at a peak, sustainable level and to consistently challenge the operation to do more, all
for the benefit of the investment and the owner.

6. Being the 'eyes and ears' of owners - what are your responsibilities?

When the hotel ownership and operational responsibilities are separated, there is strong attention on investment returns on the
part of the owner which in turn leaves a smaller margin for error for the operator. As the ‘eyes and ears’ of the hotel owner, we
offer an external perspective to the hotel and act as the bridge between asset owners and operators. Our primarily objective is
to assist hotel owners to realize the full value of their assets through a continuous process of value creation and enhancement.

7. What critical issues do asset managers face or address?

The most frequent issues that we have to address are when the operators are holding large amount of cash flow, mismanaging
capital expenditures and on-going maintenance program, accumulating large unnecessary inventories, holding important facts,
building their brand standards on the owner’s expenses, complying with operating agreements, mishandling the marketing
budget...

8. Do you also get involved when a project is still under development or construction?

Asset Manager’s responsibility is to assist hotel owners/developers in realizing their investment goals. Therefore, it is their
responsibility to provide accurate and professional services to guide developer/owners in the complex process of planning and
ensuring a suitable return on investment is made. At the same time, asset manager often supervise the hotel pre-opening,
support the development of new operations and then, provide the conventional long-term asset management. We also get
involve with renovations, takeover and acquisition supports, supervision of mixed-used development, and assistance for
fractional ownership (e.g. sale of apartments or villas). Branded residences are unique when it comes to real estate sales.
While the large operators have specific brand requirements, the actual sale remains the primary responsibility of the
developer/owners. Therefore we had to adapt and undertake this alternative support role of coordinating sales and act as
consultants throughout the project until the completion of the sale.

Interview of Mr. Alex Sogno for Hospitality Magazine 2008
Global Asset Solution is the Leading Hotel Asset Management
Company serving Asia Pacific and Middle East
HOTEL ASSET MANAGEMENT F.A.Q.