Press Release
October 24, 2000
NEW YORK, NY -- Ernst & Young LLP's Hospitality Services Group, the largest and most comprehensive lodging
advisory practice in the US, announced the formation of a dedicated Management Company Selection Service to help
owners and investors select the right professional management company to enhance assets and successfully execute
business objectives. The announcement was made by M. Chase Burritt, National Director of the Practice.
``In the current environment, selection of a management company has become a major critical success factor,'' Mr.
Burritt explained. ``Choosing the right management company and structuring a sound contract with them can launch
a new property with great fanfare and rewards, and turn a lagging property into a market leader.''
Terming management service contracts the ``most important relationship an owner can forge,'' Mr. Burritt said Ernst
& Young's Hospitality Services Group created the new dedicated service to bring a new level of sophistication
and specialization to the selection process.
``It is especially important for owners and developers to select a management company that can align their vision
for their asset with their return expectations,'' he said. ``This is extremely challenging in today's competitive
market.''
Mr. Burritt listed a number of benefits to owners and developers by selecting the ``right'' management company,
including: access to top level management and staff; implementation of employee training programs and consistent
policies and procedures; strong marketing and reservation systems; pre-opening technical expertise; branding; providing
vision and creativity; and a variety of financial benefits and incentives.
Ernst & Young's Hospitality Services Group has been called upon to deliver advisory service focused on management
contracts to a half dozen domestic lodging ownership or development companies in the last year. In every case,
the development of RFPs and the eventual selection of management companies were successfully executed at an accelerated
pace. Speed-to-market is just one one of benefits the new advisory service provides its clients.
``One clear-cut benefit is the opportunity to create value through operating efficiencies instead of asset sales
in today's tough capital markets environment,'' Mr. Burritt said. ``There are also significant financial benefits
that result from re-negotiating an existing management company contract or selecting a new one, including negotiating
less onerous management terms, securing a higher percentage of incentive fee versus base fee, subordination of
fees, contribution of investment capital either in the form of debt or equity, unencumbered exit provisions and
other options.''
Ernst & Young's Hospitality Services Group offers a number of focused disciplines and services under its Management
Contract Selection Service specialty. Advisory services are geared to goal assessments, development of RFPs, marketing
of the asset to the targets, analysis of RFP responses, selection of candidates and structuring of contracts.
``Owners and developers need to drive business into the property, manage the facility and staff efficiently, and
brand the property for long-term success,'' Mr. Burritt explained. ``A management contract holds the key to each
of these goals, the selection of which both deserves and requires the highest level of sophistication and advice.
We at Ernst & Young recognize that need and have a track record for fulfilling it.''
The Ernst & Young Hospitality Services Group is the nation's largest fully integrated hospitality practice
with over 50 dedicated advisory services professionals. The practice offers a full scope of multi-disciplinary
services for every major segment from lodging to travel, tourism to attractions. These services include assistance
with acquisition, development, operations and disposition.
Ernst & Young's Hospitality Services Group maintains a dominant market position in such major markets as California,
Phoenix, Dallas, Atlanta, Philadelphia, Chicago, Boston, New York, and Miami. It also has extensive international
experience in Latin America and the Caribbean, Europe, the Far East, and Pacific Rim.
Ernst & Young, a global leader in professional services, helps clients to quickly and confidently make financial
decisions designed to enhance value. Its 77,000 people in more than 130 countries have the industry and financial
experience to provide fresh perspectives on operating in the new economy. Ernst & Young offers traditional
audit and tax services, as well as customized services in corporate finance, online security, risk management,
the valuation of intangibles and e-business acceleration. In addition, legal services are available in various
parts of the world where permitted. A collection of Ernst & Young's latest ideas on the new economy can be
found at www.ey.com/thoughtcenter.
Ernst & Young refers to the U.S. firm of Ernst & Young LLP and other members of the global Ernst &
Young organization.
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Contact:
Ernst & Young Hospitality Services Group
Chase Burritt, 305/350-1650
chase.burritt@ey.com
or
Great Ink Communications, 212/741-2977
Roxanne Donovan/Roberto Roman/Eric Gerard