Hotel Management Agreements: 10 Key Points For Hotel Owners

Hotel management agreements can materially affect a hotel’s operation, profitability and value. We examine ten key areas hotel owners should consider before signing an HMA, from management structure, fees and approval rights to performance tests, financing and exit.

Key Takeaways

• Fees, brand requirements and capital expenditure can create significant costs, making clear budgets and owner approval rights essential.
• Responsibilities for staffing, employment liabilities and franchise compliance need to be clearly allocated between the owner and manager.
• Contract length, performance tests and termination rights can affect an owner’s ability to change managers, sell or refinance the hotel.