Hotel Management Contracts in the U.S.

Abstract

The provisions of management contracts for hotels in the United States continue to evolve as a result of changes in the relative bargaining power of owners and operators. The pendulum has been swinging mostly toward the owners' interests. Provisions in the following areas continue to be of concern: operator equity and loan contributions; initial terms and renewals; management-fee structures; operator-system-reimbursable expenses; operator-performance standards; contract termination by owner without cause, on sale, and on foreclosure; owner input in operational decision making including hotel operating policies, budgeting, and personnel; financial and operational reporting, restrictive (non-compete) covenants; books and records; insurance issues; and dispute-settlement mechanisms.