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Hotel Management Agreement Generator

Establish clear terms for professional hotel management services. Define operational responsibilities, fee structures, brand standards, and performance metrics.

What is a Hotel Management Agreement?

A Hotel Management Agreement is a legal contract between a hotel property owner and a professional management company that establishes the terms for the day-to-day operation of the hotel. This agreement defines the specific services the operator will provide, outlines the fee structure, establishes performance standards, details brand compliance requirements, addresses staffing and employment matters, sets budgeting and financial reporting protocols, and specifies the term and termination conditions. It creates a framework for the ongoing relationship while balancing the owner's interest in maintaining asset value and profitability with the operator's expertise in hospitality management and brand standards.

Key Sections Typically Included:

  • Parties and Property Description
  • Term and Renewal Options
  • Operator's Authority and Responsibilities
  • Owner's Rights and Responsibilities
  • Brand Standards and Compliance
  • Management Fee Structure
  • Incentive Fee Provisions
  • Centralized Services and Fees
  • Staffing and Employment Matters
  • Budgeting and Approval Process
  • Operating Accounts Management
  • Capital Expenditure Planning
  • FF&E Reserve Requirements
  • Financial Reporting Requirements
  • Insurance and Risk Management
  • Performance Tests and Standards
  • Termination Rights and Conditions
  • Post-Termination Obligations

Why Use Our Generator?

Our Hotel Management Agreement generator helps property owners and management companies establish clear expectations for their business relationship. With the complex nature of hotel operations and the significant financial implications involved, a comprehensive agreement ensures both parties understand their respective roles, obligations, and financial arrangements. Our generator creates a customized agreement that balances the owner's need for oversight and return on investment with the operator's need for operational control and appropriate compensation for their expertise and brand value.

Frequently Asked Questions

  • Q: What fee structure provisions should be included in a hotel management agreement?

    • A: The agreement should clearly define the base management fee (typically a percentage of gross revenue), establish any incentive fee structures tied to operational performance or profitability, and outline centralized service charges for brand-wide systems and services. It should address fees for technical services, pre-opening services, or consulting if applicable, specify the timing and calculation methods for all fees, and establish procedures for fee disputes. The agreement should also define any group service fees or cross-selling incentives within the brand portfolio, specify conditions where fees might be subordinated to other financial obligations, and address fee adjustments during renovation periods or force majeure events. Additionally, it should outline any licensing or franchise fees if separate from management fees, establish parameters for pass-through expenses versus included services, and specify how fees are handled during termination periods.

  • Q: How should operating control and approval rights be structured?

    • A: The agreement should clearly define the operator's day-to-day management authority and limitations, establish specific owner approval rights for key decisions (major expenditures, key personnel, etc.), and outline the annual budgeting process with approval timelines. It should address procedures for resolving disagreements on budgets or major decisions, specify permitted variances from approved budgets, and establish emergency decision-making protocols. The agreement should also outline the required content and approval process for annual business plans, define parameters for entering into contracts with third parties, and establish reporting requirements and frequency. Additionally, it should address owner's inspection and audit rights, specify the operator's authority regarding pricing and revenue management, and outline procedures for implementing significant operational changes or repositioning.

  • Q: What termination provisions should be included in the agreement?

    • A: The agreement should clearly define performance tests that trigger termination rights (RevPAR hurdles, GOP thresholds, etc.), establish termination rights for material breaches with cure periods, and outline termination procedures and notice requirements. It should address termination on sale provisions with applicable fee calculations, specify termination rights related to casualty or condemnation events, and outline termination payments or liquidated damages for different scenarios. The agreement should also establish post-termination transition procedures and obligations, address intellectual property and proprietary information return or removal, and outline post-termination restrictions on soliciting employees or guests. Additionally, it should specify the handling of advance bookings and deposits upon termination, address transfer of licenses and permits where possible, and establish procedures for final accounting and reconciliation of funds.