When there are contradicting incentives, it prevents the senior management from making good long-term asset maintenance and management. Unfortunately, the lodging industry executives have been favorable to revenue producing investments (cosmetic and service changes) for quite some time. This leaves the operations managers to struggle with the leftover resources so as to achieve even the slightest margin improvement, which proves quite a difficult task.
Revenue generation investment strategies can only be successful when the cost of generating revenue streams adds to the overall bottom line. Failure to invest in lodging asset management tools can and will ultimately result in operational expenses that exceed the original profit margins or erase them all together.
Many Lodging chains have discovered over the years that profit margin shrinkage can range from either a major asset breakdown (chiller, boiler etc.) or an asset negligence liability claim. The impact of a revenue investment strategy that is heavily weighted is that asset and maintenance management has been put on the back burner until the assets that draw guests start to age and deteriorate, breaking down more often than was initially accounted for.
After years of neglecting asset and maintenance management strategies that could lengthen the useful life of assets, lodging companies are faced with substantial amounts of capital expenditure at a time when financing is tough to come by and leaving them wondering what if the equipment could have lasted just a little bit longer?