The hotel industry is never short on noise. At any given moment, the conversation is dominated by brand announcements, loyalty program changes, international travel flows, interest rate forecasts, lending sentiment, private equity allocations and macroeconomic narratives. Today is no different. Optimism rises and falls with headlines. Capital flows shift with rate expectations. Forecast decks grow thicker.
All of that matters.
But when markets are uncertain and narratives conflict, the most valuable work owners and asset managers can do is focus on what they can actually control.
That work lives at the asset level. And it starts with operational friction.
Sentiment influences markets. Friction determines outcomes.
The Problem with Narrative-Driven Management
Market sentiment moves quickly. Physical assets do not.
Hotels don’t reset because forecasts improve. They perform based on daily execution, cost discipline, asset condition and the people running them, yet it is common for owners to spend far more time reacting to macro signals than monitoring the early indicators that determine real performance.
The risk is not paying attention to macro forces. The risk is assuming they will solve problems that are structural or operational in nature.
Operational friction builds quietly. By the time it shows up in quarterly or even monthly reporting, options are already narrowing.
That is why I spend less time tracking sentiment and more time tracking friction.
Across my hotels, I focus on four weekly revealing indicators:
- Night Audit Drift
I review the Night Audit Report every day. Not because it is perfect, but because it is honest.
The night audit captures micro-signals that forecasting models miss: occupancy changes, length of stay shifts, accounts receivable aging, check-ins versus check-outs and out-of-order rooms (OOO).
Out-of-order rooms are especially telling. A room that is not in service cannot generate revenue. Each unresolved maintenance issue compounds quietly. A growing OOO count is rarely a one-week problem. It is a signal of operational strain.
Small issues appear in the night audit long before they surface in the P&L.
- Customer Acquisition by Cash Quality
ADR, occupancy and RevPAR do not equal cash in the bank.
I track where bookings originate and what those bookings actually cost. Direct channels and brand.com contributions are fundamentally different from high-cost OTA demand. Fees, incentives and chargebacks matter.
Revenue quality matters more than revenue volume when margins are under pressure. Channel mix determines how much cash clears and how resilient the asset is when demand softens.
- Variable Cost Pressure
Many hotel costs are fixed in the short term. Variable costs are not.
Labor, utilities, repairs, and maintenance must be tracked as a percentage of revenue, not just in absolute or per available room (POR) terms. This reveals whether cost controls are scaling with performance or quietly eroding margins.
CapEx discipline matters as well. Vendor selection, bid scrutiny and execution timing compound over time. Accepting inflated bids or deferring necessary work is rarely neutral. Both create future constraints.
- People Check-Ins
Hotels are human businesses.
GM bandwidth, turnover risk, morale and fatigue are operational indicators, not soft metrics. When teams are stretched thin, service quality degrades, costs rise and problems linger longer than they should.
Culture is not a slogan; it is an operating advantage. Retention saves money. Stability preserves execution. Investing in people is good business.
Why Friction Matters Beyond Operations
Tracking friction improves operations. It also makes owners better dealmakers.
Capital is selective. Lenders and equity partners evaluate operators who understand assets at a granular level differently from those who rely on spreadsheet projections. When you can articulate friction points and demonstrate systems to control them, you separate from the crowd.
This discipline signals that optimism is informed by operational reality, not hope. It makes you investable. In uncertain markets, that matters more than macro forecasting ability.
Acting Before Reporting Catches Up
Quarterly reporting tells you what already happened. Friction tells you what is happening.
By tracking operational friction weekly, owners and asset managers can intervene early. They can address small cracks before they become structural problems. They can protect downside risk while preserving upside optionality.
In uncertain markets, that is the edge.
Physical reality always moves first. Those who pay attention to it do not need to chase sentiment. They are already prepared when it arrives.
Story contributed by Damon C. Healey, managing principal of Eternal Companies, a multi‑strategy real‑estate investment and advisory platform.
