Termination of Hotel Management Agreements - When Things Go Wrong…

Very few in the hotel industry will be unaware of the recent problems affecting the Banyan Tree Al Areen resort in Bahrain (which we understand may be rebranded as "Al Areen Palace and Spa" subject to receipt of necessary approvals).

As experienced industry professionals know, one of the toughest decisions to make in relation to development of a new hotel is finding the right partner – whether you are an owner or an operator. This is usually the single most important consideration and much time and effort will be spent on selecting the right brand which fits the hotel project.

However, finding the right brand to achieve the best returns for an owner and enhance an asset's value, financing and operational success is not the only consideration. Of equal value is the relationship, particularly given the long-term nature of a hotel management agreement (30-50 years is not uncommon, and some run to longer than this).