The structure chosen often depends on the size of the investor/hotel`s investment and whether land ownership plays an important role. If the hotelier prefers to minimize the obligations and responsibilities associated with land ownership, a management contract is a good choice. One cannot discuss the development of hotel management agreements (AMAs) without first talking about the separation of hotel ownership and hotel operations; a transformation of the business models of large chains, better known as the "Asset Light" strategy. Researchers and practitioners often recommend that owners and operators should consider and agree on a variety of issues when negotiating management contracts in order to create a "win-win" situation. While we clearly agree with this sentiment, it can be even more beneficial for hotel owners to initially spend so much time and resources choosing the "right" hotel operating company and maintaining the relationship after the contract is signed. The GOP is calculated by deducting operating costs from gross revenues, but there may be some debate about what is considered operating costs for the purposes of determining the operator`s fees and what is a financial risk that should be borne by the owner. Other kpis can be put into play, such as . B RevPAR (income per available roo) and ROR (room occupancy rate). With the pandemic not yet at an all-time low, it is still too early to predict lasting changes in the owner-manager relationship that could be reflected in future AMAs. Hotel brands may be able to bring short-term relief to owners under franchise and management agreements to gradually test performance returns without the need for significant document changes.

However, there are long-term effects that arise from the disruption of COVID-19 that are likely to occur. The owner`s obligations to provide working capital or otherwise finance the operation of the hotel must be clearly stated in the agreement. A hotel`s furniture, fixtures and appliances (FF&E) are often widely used and need to be replaced at regular intervals to maintain its quality, image and revenue potential. A fund is often created to accumulate capital to replace ff&e, usually a percentage of gross income. Of all the many peculiarities of the hotel industry, the hotel management contract is probably the most unique. It is a binding contract between owners and operators that has evolved over nearly six decades. In fact, the first hotel management contract was signed for the Hong Kong Hilton, which opened in 1963. Some brand management and HMA agreements include as force majeure "outbreaks, quarantines or other public health restrictions or public health boards ... " and allow the manager, in consultation with the owner, to close the hotel and possibly terminate the contract. In practice, there are differences between the terms of management contracts concluded in the context of a sale and management operation and management agreements concluded by economic operators on an independent basis, e.B.

compared to a new development. The former tend to be longer-term than the latter. In particular, we reviewed their agreement on the prioritization of 21 different objectives over the next two years and in five functional areas (human resources, finance, sales and marketing, real estate, and operations). Perhaps more importantly, we found that target alignment was significantly correlated with hotel performance. In other words, the greater the orientation of the target, the better the performance of the hotel. To eliminate some possible explanations for this relationship, we controlled for the impact that other variables such as the GM experience, the presence of an asset manager and the size of the hotel could have on their performance. We found statistical evidence that confirms that alignment actually has a positive effect on hotel performance. In the United States, where owners are likely to continue to be in favor of treating hotel staff as employees of the manager, the additional costs associated with insurance for pandemic-related liabilities must be discussed with managers to protect the owner`s performance.

In the UK and Europe, owners are generally referred to as employers of hotel staff; We can see that this approach is being considered in the context of risk allocation in the United States. from now on. Another important factor, as with any real estate investment, is the attitude of those who provide the financing. .