|1. What is the usual standard imposed on an
operator in respect of the operation of the hotel?
||Yes, again international standards are customary.
The incentive fee is often linked to a stand-aside clause.
The incentive fee is paid to the operator in case the
investor has previously received a specified minimum
or fixed amount.
|2. What performance measures are commonly
used in your jurisdiction?
||A performance test is fairly standard but the type and
nature can vary depending on the operator, nature of
the hotel, location, etc.
|3. What performance measures are commonly
used in your jurisdiction?
||Yes, the operator guarantees a certain operating
profit either in the form of a group surety, letter of
commitment or bank guarantee. This is to ensure that
the owner/investor receives a certain compensation
even if the operation profit is not reached.
|4. What is the usual position in respect of
employees? With whom does the liability for the
||This largely depends on the arrangement of
the applicable employment agreement and the
allocation of responsibilities. However, in many
cases the employment will remain with the owner.
The appointment of key positions requires approval
of the owner (budgeting, sublease and replacement
investments as well).
|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, mostly for the duration of the contract. The radius
is bigger in case of luxury hotels.
|6. Who is responsible for insurance?
||In general, the employer is responsible for the
insurance of the employee. However, in case a person
different from the employer predominantly bears the
economic risk (regarding administration, household
and activity) and receives the profit obtained, such
person and the employer are jointly liable for social
|7. Does the HMA give rights in real estate in your
||Not in itself. Yet it is possible to make a note in the
land registry system to reveal personal circumstances
of the owner with the legal consequence that
whoever obtains registration in the relevant land
register deposit cannot rely on the ignorance of
such circumstances. Such provision explicitly names
the following circumstances: restrictions on asset
management, for example, the note of minority,
the appointment of a trustee, the attainment of
majority and the opening of insolvency proceedings.
However, in practice, this is not done often.
|8. Does the HMA need to be recorded against the
property, if this is possible in your jurisdiction?
||It is not required to register the HMA but might be
implemented in favour of the operator (please see
point 7 above).
|9. Where financing is taken is it standard to obtain
a Non-Disturbance Agreement (“NDA”) as part
of a management or lease agreement?
||NDAs are included in HMAs if the operator intends
to take up a loan regarding activities of the hotel.
However, they are not a decisive factor during
the negotiation of HMAs in comparison to fees,
performance clauses and termination rights.
|10. What other agreements usually sit alongside an
HMA in your jurisdiction?
||Sometimes, a tri-partite agreement is concluded between
the owner, the operator and the financing banks.