Originally published in HotelNewsNow.com, January 30,
2012
Story Highlights
- Three headline-grabbing lawsuits raised concerns about the
enforceability of hotel management agreements.
- Owners and operators should collaborate on solutions outside of
the management agreement that will reduce uncertainty over the
duration of the contract without changing its terms.
- If owners and operators work together to incentivize adherence
to the optimal terms through mechanisms such as easements and
lease/purchase options, they restore the value of the contract at
no appreciable costs beyond the negotiation of the terms.
During the past few years, three headline-grabbing lawsuits
raised concerns about the enforceability of hotel management
agreements. In their wake, public discourse generally characterized
the lawsuits as presenting a difficult choice to hotel owners and
operators: whether they should deviate from their preferred
management agreement terms in order to
