|1. What is the usual standard imposed on an
operator in respect of the operation of the hotel?
||Contractual performance standards vary between
operators, type of hotel etc.
|2. What performance measures are commonly
used in your jurisdiction?
||A performance test is fairly standard (together with
a termination right for failure to meet such a test),
but the type and nature can vary depending on the
operator, nature of the hotel, location, etc. A standard
performance test would consider achievement against
budget and/or against a competitive set of local or
|3. Is an operator or owner guarantee common in
||For branded operators, an operator guarantee would
be unusual. For more ordinary lease structured
agreements a guarantee would often be more usual,
depending on the initial investments in the hotel made
by the owner.
|4. What is the usual position in respect of
employees? With whom does the liability for
the employees sit?
||The operator would normally be the employer, but it
could be either.
|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?
||Non-compete clauses are common and usually
|6. Who is responsible for insurance?
||The owner is responsible for the cost of property
insurance (even if sourced by the operator) and the
operator may put operational insurances in place
(albeit this would be an operating expense).
|7. Does the HMA give rights in real estate in your
||Not in itself. However, where key money is granted or
rights of first refusal on a sale etc., restrictions can be
registered on the title of the hotel.
|8. Does the HMA need to be recorded against the
property, if this is possible in your jurisdiction?
||It can be, but normally not the HMA itself. However,
specially agreed rights and terms in relation to the
property as such given to the operator under the
HMA may be recorded, as per the above.
|9. Where financing is taken is it standard to obtain
a Non-Disturbance Agreement (“NDA”) as part
of a management or lease agreement?
||This depends on the bank and the operator.
Traditionally, NDAs have always been required where
there is finance and a management agreement.
|10. 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:
- (Brand) Licence Agreement
- Central Services Agreement
- Technical Services Agreement – on a new build or
- Central Reservation Services Agreement.