Hotel management agreements are usually long-term agreements. Under such agreements, the hotel operator has almost exclusive control. The role of the hotel owner is that of a sleeping partner until problems arise. Hotel management agreements can be long and sometimes complex, but many of the same problems often arise. The structure chosen often depends on the size of the investor/hotelier`s investments and whether land ownership is an important issue. If the hotelier prefers to minimize the obligations and responsibilities associated with Demland`s ownership, an administrative agreement is a good choice. One of the reasons hotel management contracts are becoming more common is that hotel owners delegate most of their responsibilities to management companies. Hotels are increasingly operated by franchisees or independent operators, unlike the hotel owner. The owner of the hotel is now considered rather an investor of the hotel, unlike its manager. Many hotel owners have little or no experience in hotel management, which is why they delegate it to a company that has expertise in the hospitality industry. The owner may also benefit from a right of termination if the operator does not meet the performance criteria set out in the management agreement or if the operator undergoes changes as acquired by a competitor. While the hotel owner provides the means to run the hotel, most of the other tasks will be entrusted to the management company. These tasks include: operators operating the hotel under their own brand will likely require the right to cover expenses in order to preserve the brand appeal linked to its goodwill and common operating standards.
It is important to ensure that this does not become an « empty cheque » – if the group of operators decides to introduce a swimming pool in all branded hotels, the owner should not be forced to accept the construction of a new pool complex in his hotel. The owner would prefer that the hotel staff be employed by the operator, but this is rarely feasible. The operators defend the opposite position, with another as vis-à-vis the manager. If hotel staff are employed by the owner, the owner should deduct reasonable compensation from the operator to protect against liability for staff resulting from mismanagement of the employer-employee relationship. The management agreement should allow the owner to limit the operator`s ability to generate certain types of expenses that may result in increased revenue and hence a higher base charge, but may not correspond to higher profits, such as promotions.B. Good practices are designed to agree on an operating budget with expected benefits that the owner can check from time to time. In practice, differences have emerged between the terms of administrative agreements concluded in a « return to sale and management » transaction and administrative agreements concluded by operators on a stand-alone basis. B, for example, with regard to the development of a new development. The former are generally longer than the latter. The landlord must be careful not to inadvertently create a lease under which the operator enjoys the rights of a commercial tenant. This risk is due to the fact that the administrative agreement, if poorly drafted, may have the two fundamental characteristics necessary for the award of a lease: the exclusive ownership of the premises for a specified period of time.