Hotel Room Management Agreement

Other cases have helped consolidate the operator`s position, such as Marriott International, Inc. v. Eden Roc, LLLP (N.Y. Sup). Ct. 2013), which found that a hotel management contract was a personal service contract under New York law and was therefore exempt from termination proceedings. From the operator`s point of view, the operator not only wants HMA to be linked to a new owner (which protects the operator`s investment in the hotel and its source of income), but the operator also wants to ensure that the owner will work with the operator to act in the best interests of the hotel. Having a competing owner at the same time as the operator means that the operator is required to make transactions with a party that may be actively oriented against the operator`s interests in the market, which could threaten the hotel`s operation and source of revenue. In addition, the largest capital of a hotel operator is its management expertise and, in the case of brand operators, the intellectual property of the brand. A hotel operator does not wish to disclose such valuable information to a competitor who may use it in any way to promote its own activities. 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.

One of the ways in which hotel operators can demonstrate their effectiveness is to know how much they can increase profit margins or how much revenue exceeds costs. Overall, the margin percentage is a good indicator of a hotel`s financial health and allows a simple comparison with other hotels with a similar product: if your profit margin is higher than that of a competitor, it confirms that you run your hotel more efficiently. Conversely, this is a sign that adjustments are needed when your profit margin is lower.

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