Emerging Trends: New Focus in Hotel Management Agreements
By
Ellen S. Smith
Hotel owners and operators should take note of newly evolving ways of looking at management
contract issues. While some points in hotel management agreements, such as fee structure, have
always been highly negotiated, a number of other issues have more recently emerged as the focus
of much attention for hotel owners and operators. Factors such as the changing role of
technology in hotel operations and the dynamic market forces driving hotel performance have
caused owners and operators to reevaluate contract provisions once thought adequate. This
article highlights a few of the more prominent current trends in thinking of hotel owners and
operators.
The growing role of technological systems in hotel operations has forced more attention on
issues such as which party owns guest history information, particularly relating to corporate and
group accounts, with respect to the hotel. The ability to obtain full guest history information is
of crucial importance to potential hotel purchasers who are buying not only real estate but also an
ongoing business, and yet many buyers are told – and accept – that such information is not
available to them. Hotel owners are often unable to assure transfer of all guest history
information to hotel buyers because that information, while legally owned by the hotel owner, is
completely under the control of the hotel operator and often stored in a "cluster" or "complex" of
information and systems for multiple properties managed by the operator. Not surprisingly, most
hotel management agreements, particularly agreements for major brand operators, are either
silent on the issue of guest history information or provide that the guest history information is the
property of the operator. This void allows an operator to simply refuse to turn over guest history
information to a buyer of the hotel. Some hotel owners have averted this problem by negotiation
of management agreem