How Bond Requirements May Shield Hotel Owners From Contractual Injunctions in HMAs

Hotel management agreements (HMAs) are typically long-term agreements that extend for decades. Yet, courts in New York and beyond have recently confirmed that hotel owners may terminate a HMA at any point, for any (or no) reason.

Hotel owners have, in turn, increasingly begun to invoke their right to terminate as a means of disengaging from poorly performing operators and unlocking value from underperforming properties. This has led hotel operators to seek "contractual injunction" provisions in HMAs, which would afford them by contract what is otherwise unavailable at common law.

In their latest New York Law Journal article, Pryor Cashman Hotel + Hospitality Chair Todd Soloway and Partner Bryan Mohler examine the enforceability of contractual injunction provisions in HMAs, and explain how the CPLR's injunction bond requirements imposed on operators may act as a barrier to enforcing such provisions.