A hotel management agreement allocates control for a decade or more. Most value that owners lose is not taken in the fee negotiation — it is signed away quietly in five clauses.
1. Term, renewal and the owner’s exit right.
Long initial terms with automatic renewals and no owner exit right lock the asset to today’s operator at today’s performance. The ask: a defined owner exit-for-convenience with a formula-capped buyout, and renewal that is conditional, not automatic.
2. The fee base — what “revenue” excludes.
A base fee on total revenue with no exclusions taxes the owner for service charges, out-of-order compensation and recoveries. The ask: a defined exclusions schedule, so the fee is paid on revenue the hotel actually earns.
3. Performance tests — with teeth.
Tests that compare against a vague compset, cure periods that stack for years, and budgets deemed approved in silence make accountability optional. The ask: defined compset, objective RevPAR-index tests, short and non-cumulative cure windows, and termination for repeated failure.
4. Owner approvals — budgets and capex.
Deemed-approved budgets and operator-committed capex above thresholds hand the chequebook to the manager. The ask: real approval windows with consequences, owner consent above a defined capex threshold, and FF&E reserve spent to an approved plan.
5. Data, loyalty and the exit.
Guest, loyalty and rate data that is not clearly the owner’s at exit — and audit rights that exclude centralized charges — devalue both the asset and the negotiation. The ask: data ownership and transition obligations drafted at signature; audit rights over all operator-charged costs.
Signature approaching?
Read the HMA Red-Flag Checklist — the 25 clauses across 8 categories — or book a line-by-line review.