A company's competitive edge is crucial to its success. From a resource-based viewpoint, efficient resource allocation is critical to building competitive advantage. Taking the Hotel industry into consideration, the Asset Light Model has indeed radical changes, mainly because it focuses on operations rather than investments in physical assets. Many big hotel brands that have adopted the Asset Light Model have increasingly sold their real estate holdings in order to focus on hotel management and franchising. According to Boston Hospitality Review 2021, Marriott International, for example, held roughly 1,423,044 rooms globally by the end of 2020, with over 99 percent of them, or 1,407,144 rooms, operating under management contracts or franchise agreements. Hilton, another big worldwide hotel company, operated 1,019,287 rooms in 2020, with 999,887 managed or franchised rooms accounting for 98 percent of the total portfolio. This significant shift in asset ownership is in line with a recent global trend in the hotel industry. These corporations discovered they were significantly exposed to hazards associated with real estate investments, such as devaluation, high leverage, huge operating and financing expenses, and inadequate liquidity, since they owned a large number of hotel assets. Their capacity to respond to and capitalize on possible investment opportunities was also hampered by increased risks and expenses and impact their long-term growth and profitability. Hotel firms have been seeking innovative methods to reduce operating expenses and reduce the risks connected with owning real estate holdings to combat these issues. An asset-light business model is proven to be a successful strategy for huge global hotel chains. For starters, hotels may realize cost-efficiency advantages by lowering their commitment to real estate assets and outsourcing capital investment duties. Furthermore, franchising allows businesses to expand and flourish at a wide scale without having to invest huge sums of money in a variety of sites. Through more centralized and efficient procedures, capitalizing on scale typically leads to revenue increase with low added expense. Secondly, lowering capital needs for significant investment projects frees up funds for the development and reinforcement of core capabilities that may help consumers receive higher value. With the introduction of COVID-19 vaccinations and relaxation of travel restrictions, tourism is expected to revive slowly but steadily. But with the prospect of a robust economic rebound, hoteliers will have new obstacles in providing health and safety standards. Hotels that agree to the Asset Light model, in particular, must guarantee that other hotels operating under their flags adhere to the same health and safety regulations in order to keep them clean and safe for both guests and workers. To meet this new requirement, they'll have to reconsider their competitive advantages. By winning the trust of tourists and establishing themselves apart from their competition, hotels may acquire a new competitive edge by investing in excellent health and safety practices. Marriott International formed the Global Cleaning Council, a multi-faceted framework to improve company cleanliness standards in response to the COVID-19 pandemic's increased health and safety risks. Hilton has created The Clean Safety Program, which includes improved systems and personnel training to ensure that guests remain in a safe and clean environment.
While hotels have always been interested in utilizing technological innovations, from an entirely different perspective that is appropriate for the post-pandemic era, such as mobile check-in and check-out, which were developed primarily from a customer-experience perspective rather than from a safety and cleanliness perspective. To alleviate health and safety concerns, they must reassess and renew their investment strategies that support touchless and contactless services and transactions. Some hotels have implemented artificial intelligence-based technologies such as Google Assistant and Amazon Alexa, while others have implemented high tech messaging systems that support real-time communication with their guests on property, reducing the need for unnecessary human interactions while still providing a personalized experience.
The asset-light approach of being lean isn't enough on its own, but the right-asset strategy of investing in the assets that are suited for the organization is becoming a more important aspect for success. As a result, it is more necessary than ever for hotel firms to effectively use and allocate limited resources in order to preserve a competitive edge.
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