Hotel Management Agreements – Key Components

Hotel Management Agreements (HMAs) are pivotal in defining the relationship between hotel owners and management companies. HMAs outline the roles, responsibilities and expectations of both parties, ensuring the hotel operations run smoothly and profitably.

Key Components of Hotel Management Agreements

1. Term and Renewal – HMAs may specify an initial term (duration of the agreement) usually ranging from 5 to 20 years, with options for renewal, including any renegotiation of terms.
2. Management Fees and Financing – management fees can consist of a base fee (a fixed percentage of the hotel's total revenue) and/or an incentive fee (a variable fee based on the hotel's profitability, encouraging the management company to maximise operational efficiency and profitability).