Exclusive interview with João Cravo, VP of Asset Management, Trilight Hospitality Asset Management

Hospitality assets across the GCC are becoming increasingly complex, particularly with the rise of mixed-use developments and branded residences. How has this changed the role of independent asset management in recent years?

The role has evolved significantly as independent asset management was viewed primarily as a performance-monitoring function — focused on reviewing reports, challenging budgets and tracking how the hotel was performing. Today, especially in the GCC region, the role has become far more strategic than that.

Many hospitality assets today are no longer just hotels, particularly when within mixed-use developments where the hotel operates alongside branded residences, F&B concepts, wellness offerings, retail and in some cases, office or entertainment components. In many instances, the residential component is a key driver of the overall investment proposition, however its inclusion also makes the model much more complex.

If these projects are set up well, they can create real value across the different components. However, they can also lead to operational challenges and stakeholder conflicts if the overall structure, governance and long-term operating framework are not carefully thought through from the outset. Each component should be assessed independently, with clearly defined objectives and financial logic, ensuring that the project in its entirety works without one component subsidising another.

In these mixed-use developments, the asset manager function and role have evolved substantially. It is no longer sufficient to evaluate the hotel operation in isolation. A broader approach is required to first understand and then develop and manage the complete ecosystem, including the various stakeholders involved. This includes aligning interests across shared areas and services in a way that creates synergies, supports collaboration and protects the long-term value of the asset for all stakeholders.

Many hotel owners assume that partnering with a strong international operator guarantees long-term success. Where do the biggest blind spots tend to emerge within operator-owner relationships?

One of the key considerations that is often overlooked is at the very beginning: selecting the right operator or brand for the asset. Owners can sometimes place too much emphasis on fee structures, whereas the most important question should be whether the operator is the right fit for the asset and whether the chosen brand has the ability to genuinely create value.

A stronger brand can easily justify a higher fee if it delivers better distribution and stronger market reach through its systems and platforms. However, this value proposition needs to be carefully assessed. In markets where there is already a high concentration of hotels operating under the same brand family, the incremental value by that brand may be more limited than expected.

More broadly, owners should not assume that appointing a leading operator automatically guarantees into a successful investment outcome. The operator relationship is a long-term partnership, and the decision should be evaluated by considering the overall brand fit, the operating model, the commercial assumptions and the agreement itself.

The complexity increases further in mixed-use projects, where the interests extend beyond the hotel owner and operator, to include residential owners, as well as owners and tenants of other components. This makes early strategic planning and ongoing asset oversight critical. Owners benefit from engaging advisors who remain actively involved beyond the development and pre-opening stages, to support long-term performance.

From your experience, what are some of the biggest differences between how operators measure success versus how owners and investors evaluate asset performance?

Operators and owners evaluate the same asset, but from fundamentally different perspectives. Operators typically focus on the performance of the business as an operating platform — including key operating metrics such as occupancy, ADR, RevPAR, guest satisfaction, loyalty contribution, market share and adherence to brand standards. While these indicators remain important and will always be, owners and investors primarily assess the asset through a long-term investment lens. Their focus is on profitability, cash flow, return on capital and overall operational efficiency. A hotel can be performing well operationally while still under-delivering from an ownership perspective if the cost base is too high, the capital structure is suboptimal, or certain parts of the asset are not performing to their full potential.

The other shift in the market is the changing nature of operators themselves. Many are prioritising the expansion of their platforms, including through franchise models, which provides owners with more options but also requires clarity on objectives and expectations at the outset of the partnership.

Ultimately, the core difference remains operators are primarily focused on the day-to-day running and performance of the business, whereas owners are focused on whether the asset is generating the right long-term value. Increasingly, even trophy and luxury assets that were previously not fully optimised are being refined towards higher levels of operational efficiency. This is occurring even where current owners may have no immediate intention to exit, although such optimisation preserves optionality for future ownership cycle and ensures the asset is well positioned for any strategic shift overtime.

Hospitality today is often driven by occupancy, visibility and guest experience, but how can owners identify whether an asset is truly performing sustainably behind the scenes.

Occupancy remains an important performance indicator, but it only represents one part of the overall story. In many cases, assets that achieve very high occupancy levels may struggle to keep pace with the maintenance requirements and ongoing investment needed to preserve the asset, creating challenges over the longer term. Owners should look beyond top-line and bottom-line performance and assess the profitability by department, labour productivity, cost per occupied room, energy efficiency, long term capital expenditure planning and the asset’s ability to maintain the integrity of these ratios without compromising the future.

This approach is a key consideration in the assets we manage and encourage owners to maintain a strong focus on long-term capital planning. An asset may appear to be performing well today; however deferred maintenance or insufficient reinvestment can quickly become a future liability over time. This is particularly relevant in a region like the Middle East where the pace of innovation continues to accelerate.

It is also important to recognise that occupancy can be driven through increased spend; market visibility can be purchased and even guest satisfaction can sometimes be enhanced in the short term through over-servicing and over-spending. Sustainable performance requires a deeper evaluation that considers not only current operating results, but also asset condition, maintenance standards, lifecycle planning in conjunction with the market trend and funds available.

At what stage should developers and investors involve independent asset managers in a project and what costly mistakes happen when strategic oversight comes in too late?

As owner representatives, asset managers should be involved from the earliest stage of a project. Key phases such as highest and best-use analysis, concept development, feasibility assessment and operator selection all benefit from the involvement of an experienced asset management company. Even where external consultants are appointed, the ownership team still needs the ability to critically review, challenge recommendations and validate key assumptions and outcomes. One common example is the appointment of designers and architects who may have limited understanding of hospitality market dynamics and the commercial implications of design decisions. The layout, facilities, room mix and operational requirements can have a significant impact on the long-term performance of the asset and should not progress without a robust strategic and commercial review.

This is particularly important for mixed-use and luxury developments, where the ambition of the project can sometimes exceed the commercial discipline and the right development methodology. Creating a visually impressive asset is one objective; however, creating an asset that is equally compelling while operating efficiently for the next two decades and achieving the desired investment returns is far more complex.

Independent asset management adds value from the outset by introducing a commercial and operational perspective into decisions that may otherwise be driven by architecture, brand standards or development momentum. This ensures the final product is aligned with the vision and positioned for long-term value creation.

As the GCC hospitality market becomes more competitive and investment-focused, how do you see the relationship between owners, operators and independent asset managers evolving over the next few years?

The Middle East has developed and continues to develop some of the most impressive hotels and mixed use developments in the world. The region has become a leading platform for brands to innovate, launch new concepts and enhance their product offerings. As a result, we are seeing brands introduce sophisticated experiences, amenities, and overall product standards – at times creating assets that are beyond traditional benchmarks. However, this level of ambition should not come at the cost of owners and developers. With the right commercial discipline, it is possible to develop assets that are financially sustainable.

We also believe that for many years, the growth of the market allowed certain operational inefficiencies to be absorbed. Strong demand, destination growth and increasing market appeal helped mask some underlying challenges. As the market continues to mature, capital becomes more selective and new supply increases competition, owners will place greater emphasis on profitability, cash flow generation, capital allocation and governance rather than focusing solely on topline growth and brand affiliation.

This shift does not mean relationships between owners and all stakeholders will become adversarial; in fact, the strongest partnerships are built on alignment of sustainable grounds to work. Operators will increasingly be required to justify investment requirements, whether related to repositioning initiatives or capital allocation, particularly as more mature and older assets require strategic reinvestment. Owners will seek greater transparency into performance drivers, while independent asset managers will increasingly play a critical role in bridging the gap between operational performance and investment outcomes.

We expect the continued growth of branded residences, mixed-use destinations and more sophisticated ownership structures to accelerate this trend. As assets become more complex, evaluating performance through a single lens is no longer sufficient. This is why we consistently refer to the importance of understanding the “sum of the parts” – an approach that has become our motto.

Ultimately, the owner needs an independent perspective focused not on operating the hotel, or protecting the brand, but on ensuring that the overall asset continues to deliver the appropriate  commercial outcomes over time.