|1. What is the usual standard imposed on an
operator in respect of the operation of the hotel?
||Commonly, the standard imposed on the operator is that the operator will use the skill, effort, care and expertise reasonably expected of a prudent operator of hotels.
KPIs and other prescriptive standards are less common, although the inclusion of such standards varies depending on the consequences flowing from failures to achieve such standards, the operator and the asset.
|2. What performance measures are commonly
used in your jurisdiction?
||Common performance measures are generally related to performance against an agreed budget and / or Revenue Per Available Room (RevPAR) relative to a set of similar competitors.
These measures are often linked to termination rights for failures to meet these standards.
|3. Is an operator or owner guarantee common in your jurisdiction?
||The inclusion of guarantees depends on identity and structure of operator and owner, including the financial position and assets held by them.
|4. What is the usual position in respect of
employees? With whom does the liability for the
With the exception of the General Manager, and possibly other key employees (e.g., executive chef), the owner employs all hotel staff and is liable with respect to:
- minimum wage obligations, work, health and safety (WHS) and discrimination law compliance
- any penalties, damages, compensation or other order arising of unfair dismissal
- vicariously liability for the acts and omissions of employees
For everyday management, owners usually give operators permission to direct and control its employees.
|5. Is it usual to have a non-compete clause, e.g.
that no other property with that brand can open
within a certain radius?
||Yes, based on a geographic radius.
|6. Who is responsible for insurance?
The owner is typically responsible for obtaining insurance for:
- the property
- business interruption
- items owned by the owner or people other than the operator
The operator is typically responsible for the following insurances:
- public liability
- workers compensation
- motor vehicle
- employee fidelity
- other operating risks it is customary to insure against in the operation of hotels
|7. Does the HMA give rights in real estate in your
|8. Does the HMA need to be recorded against the
property, if this is possible in your jurisdiction?
|9. Where financing is taken is it standard to obtain
a Non-Disturbance Agreement (“NDA”) as part
of a management or lease agreement?
The terms of NDAs vary depending on the parties.
|10. What other agreements usually sit alongside an
HMA in your jurisdiction?
There may be other associated agreements depend on the operator, which can include:
- IP licensing agreements
- Services agreements for the provision of services (e.g., accounting, software licensing, access to reservation networks)
- Individual employment contracts for the general manager of the operator