Hotel Management Agreements Sample

However, recently, the average duration of many management contracts has decreased considerably, notably for the following reasons: one of the reasons why hotel management contracts are becoming more frequent is the tendency for hotel owners to delegate most of their responsibilities to management companies. Hotels are increasingly operated by franchisees or independent operators, unlike the hotel owner himself. The owner of the hotel is now seen as an investor in the hotel rather than its manager. Many hotel owners have little or no experience in running a hotel, and that`s why they delegate it to a company that has expertise in the hotel management industry. The owner may also obtain a right of termination if the operator does not meet the performance criteria set out in the management agreement or if the operator undergoes changes, for example. B acquisition by a competitor. Even if the operator manages the hotel on a daily basis, it is necessary to address the residual responsibility of the owner. Where the operator acts as an intermediary for the owner, the owner should receive compensation to ensure the situation in which the operator exceeds his competence or otherwise is liable to the owner without justification. The operator`s remuneration for the provision of services under the hotel management contract is generally granted as a fee which is in fact an operating expense of the establishment. This fee should encourage the operator to provide good services, but the owner`s return is reduced by deducting the operator`s fee before distributing profits. It should be noted that the relationship between owner and operator is increasingly governed not only by the traditional management contract, but also by parallel agreements such as licensing, licensing or service agreements. In order to be able to fully assess the value of payments due to the operator, it is necessary to assess the charging obligation of such parallel contracts.

The administrative agreement should make a clear distinction between the responsibilities to be assumed by each owner and each operator and specify what each party must do in order for the other party to fulfil its part of the agreement. There may be tensions where the residual risk lies – if measures that are not allocated under the agreement are needed, who should perform this task and to whom and at what cost? Hotel management contracts can be long and sometimes complex, but many of the same problems are common. In practice, differences have arisen between the terms of management agreements concluded in the context of a sale and management transaction and management agreements concluded by operators on an autonomous basis, for example as regards a new development. The former tend to be longer than the latter. While most of the obligations fall on the hotel management company, the contract should also describe the responsibilities of the hotel owner, for example.B. ensure that the hotel complies with the relevant laws, keeps the hotel financially stable and maintains insurance. The details of the management company`s responsibilities should all be explicitly described in the hotel management contract. There will likely be negotiations between the hotel owner and the hotel management company until both match and are satisfied with each other`s positions.

Once this takes place, these obligations should be enshrined in the treaty as concluded….