This guide, to be published in 2023, will provide an extensive review of hotel management agreements across the United States, offering an in-depth understanding of the key terms and clauses of these agreements. In addition, the reviews are supported by expert insights to provide you with relevant and useful information.
Why is this guide more relevant than ever?
Among all the many peculiarities of the hotel industry, the hotel management contract is likely the most unique. It is a binding contract between owners and operators that has evolved over almost six decades; in fact, the first hotel management contract was signed for the Hong Kong Hilton, which opened in 1963.
The management contract structure allowed hotel companies to expand rapidly and become what is now known as “asset light.” Of course, hotel owners stand to benefit, in that they can bring in sound management expertise to their property and partake in the financial upside, unlike the traditional lease model that preceded it. Leveraging their management expertise, operators pushed for the hotel management contract to rapidly become the norm in the industry as a “take it or leave it” proposition to owners.
Over time, the hotel management contract has become an intricate web of terms and clauses that defines the relation between owner and operator. The balance of power in this relationship needs to be carefully established, which was, and unfortunately still is, not always a given. Owners need to be on their toes and bring in expert advice from consultants and lawyers to navigate the complexities of an agreement that can bind them for decades to come.
This year’s HVS Guide to Hotel Management Contracts by Robert Fitzpatrick and the HVS Hotel Asset Management & Advisory Team will give insights into prevalent terms and how contracts have evolved over the last five years. This guide provides a reference for owners to understand the language of hotel management contracts while demonstrating our extensive “hands-on” experience. The authors provide insight into the five principal sections of a management contract: term and renewals, operator management fees, performance test, budget and expenditures, and termination of the contract by owner. Key money and indemnification are also addressed.
We hope this guide can serve the industry as a reference to make better decisions, effecting better and more-balanced relations between owners and operators.
- The full guide and survey report, comprising approximately 30 pages, can be purchased for US$2,000.
All reports are available in PDF (soft copy) only. A personalized copy of the report will be sent.
For more information, please contact Robert Fitzpatrick at [email protected].