|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. Generally speaking, HMAs
do not usually contain KPIs, SLAs or specific standards
as fee structures often mean owner and operator’s
interests are aligned.
|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 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 RevPAR against a competitive set of
local or similar hotels.
|3. Is an operator or owner guarantee common in
||For branded operators, an operator guarantee would
be unusual. Regarding owner guarantors it will depend
on the owner vehicle, if it owns the hotel (i.e. are there
are Propco/Opco structures in place, etc.).
|4. What is the usual position in respect of
employees? With whom does the liability for
the employees sit?
||The owner will be the employer, except potentially for
the General Manager and, depending on the nature of
the hotel, certain other senior staff.
|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-competes are common and usually negotiated.
|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 possible in your jurisdiction?
||Not the HMA itself but rights under the HMA may be
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 redevelopment
- Central Reservation Services Agreement.