In some cases, there is no shortage of performance tests in management agreements. In Patel`s case, the reason his company does not introduce them is purely altruistic. “We don`t want to put too much pressure or fear on our partner that could prevent them from performing,” he said. An agreement between the owner, the hotel operator and the owner`s credit bank, under which the bank agrees that the bank will retain HMA if the owner is late in his loan and closes the bank. As a general rule, the bank has the right to intervene and cure an owner`s failure after the HMA. Today, the form of hotel operators in HMA is an important factor in the smooth functioning of the hotel investment market. DLA Piper`s Hospitality and Leisure Sector Group has negotiated for a wide range of different clients in the H-L landscape (owners, investors, operators (both brand labels and white) and lenders) in all the major legal systems of the world. Any result that makes the hotel manager and owner more consistent is a positive trend that can find its basis at the beginning of the relationship, thanks to the terms of the management agreement. However, according to Jones, operators can accept shorter maturities, but at a price. “If an owner wants a shorter management contract, the fees have to go up,” she said. Do you know your assets before you structure the agreement – A hotel`s asset manager should have a complete overview of the asset with accurate knowledge of the return potential, the expense structure and the risk of the asset. Creating mutual understanding and empathy – perspective reception helps the owner and operator to be reasonably oriented in their understanding of their role with respect to ownership. A oriented interest does not mean that the accepting operator is a sub-owner or that he must accept the same level of risk as the owner.

Beyond the performance of the results, the owner should recognize the efforts and resources that the operator has invested in the operation of the hotel. While management companies often point out that a DHMA royalty clause helps to guide the interests of both parties, as they only make a profit when they generate them for homeowners, previous studies have shown that hotels rarely generate such incentive rates. Owners may fall into the trap of making assumptions about the extent of the operator`s liability. The operator will endeavour to minimize its responsibilities and impose additional costs for ancillary services that the owner has wrongly accepted as part of the operator`s proposed package as part of the entire package.