|What is the usual standard imposed on an
operator in respect of the operation of the hotel?
||Parties usually enter into standardised HMAs. The
usual standard imposed on an operator is to achieve
long-term profitability while maintaining brand
standards. Although operators are usually granted a
broad authority by the owners, review or approval by
the owners can be compulsory in certain major areas,
such as the annual operating and capital expenditure
|What performance measures are commonly
used in your jurisdiction?
||The common measure of performance is based on
the total revenues of the hotel in accordance with the
Uniform System of Accounts.
|Is an operator or owner guarantee common in
||It depends on the parties to the HMAs.
|What is the usual position in respect of
employees? With whom does the liability for
the employees sit?
||Commonly, HMAs provide that the operator is liable
for the employees who are, as the case may be,
transferred from the owner to the operator when the
owner operates the hotel prior to entering the HMA.
|Is it usual to have a non-compete clause, e.g.
that no other property with that brand can
open within a certain radius?
|Who is responsible for insurance?
||The owner is usually responsible for property
insurance, whereas the operator is usually responsible
for operational insurance.
|Does the HMA give rights in real estate in your
||No (except possible right of first refusal in case of sale
of the hotel, to be granted by the owner).
|Does the HMA need to be recorded against the
property, if this is possible in your jurisdiction?
|Where financing is taken is it standard to obtain
a Non-Disturbance Agreement (“NDA”) as part
of a management or lease agreement?
|What other agreements usually sit alongside an
HMA in your jurisdiction?
There could be a number of different agreements
depending on the operator, these include:
- Employment contract for hotel manager;
- (Brand) Licence Agreement;