Articles Posted in How to Terminate Hotel Management Agreements

Published on:

28 August 2011

Hotel Lawyer update on Hotel owners terminating hotel operators. Over the years we have spent a lot of time on the subject of getting a great hotel operator and terminating bad ones. Owner discontent seems to erupt when operators continue to deliver disappointing results and ignore owner’s requests to drive the top line and manage costs. Then the operators wonder why owners are upset. See for example “Terminating hotel management agreements when things don’t work” and “How to terminate a hotel management agreement when an operator really deserves it!“.

Turnberry Isle Resort back under founding family’s management and control.

Over the weekend, the owners of the Turnberry Isle Hotel & Resort in Aventura, Florida took control of their hotel and terminated their relationship with Fairmont Hotels.

The resort was created by the Soffer family’s Turnberry Associates in the 1970s, and reacquired in 2006. Turnberry recently completed a $150 million renovation. The hotel had been operated by the Fairmont chain until Sunday, August 28, 2011.

CONTINUE READING →

Published on:

21 August 2011

One of the most read articles in the history of Hotel Law Blog is entitled: “
M Waikiki’s Edition lawsuit against Marriott and Ian Schrager – an owner’s HMA dispute with Marriott.

I have gotten a lot of compliments on the article from people saying that it helped them understand what was going on there. But a recent letter from Ed Ryan, Executive Vice President and General Counsel of Marriott International took quite a different tone.

Although I disagree with many of Ed’s points, the letter is thoughtful and well written. Ed encouraged me to publish it so people could see the “other side” of this issue. And in the interest of airing another view, I have done just that.

Read Ed’s letter below. Then read the blog again, and take a look at the complaint. Then you be the judge.

I look forward to hearing your thoughts.

CONTINUE READING →

Published on:

07 August 2011

Hotel Lawyer with what it all means: The M Waikiki’s lawsuit seeking to terminate Marriott as its hotel operator for the Edition Waikiki, in Honolulu.

I was recently interviewed by Jason Freed of HotelNewsNow (a division of Smith Travel Research) about three high profile lawsuits in the hospitality industry.

The first case we discussed was the recent lawsuit filed by the owner of the 353-room Edition Waikiki against Marriott and Ian Schrager. As the hotel’s owner, M Waikiki LLC asked the New York Supreme Court to terminate its 50-year, no-cut hotel management agreement (HMA) with Marriott on its $250 million Honolulu hotel and to award damages for misrepresentation and breach of contract.

This lawsuit raises issues we have covered extensively in the HMA Handbook and in many articles under the Topic of Hotel Management Agreements on www.HotelLawBlog.com, See, for example, “Hotel management agreement terminations — Is there a better way?.”

This is an interesting lawsuit, so first let’s look at the background facts and then let’s see what the claims and the implications are.

For a response from Marriott, please see “Hotel Lawyer with more on M Waikiki Edition lawsuit against Marriott – What Marriott’s General Counsel says.”

Click here to download a copy of the complaint.

CONTINUE READING →

Published on:

10 March 2011

Hotel Lawyer: JMBM’s Global Hospitality Group® announces publication of The HMA Handbook, a practical guide for negotiating Hotel Management Agreements for Hotel Owners, Developers, Investors and Lenders

LOS ANGELES–The Global Hospitality Group® of Jeffer Mangels Butler & Mitchell LLP (JMBM) today announced the release of The HMA Handbook, Hotel Management Agreements for Owners, Developers, Investors & Lenders. This e-book is a practical guide for decision makers who want pragmatic advice from veterans with business and legal perspectives on getting great hotel operators, negotiating a fair hotel management agreement (HMA), and terminating a bad one when the operator deserves it..

Co-authored by JMBM’s Global Hospitality Group® Chairman, Jim Butler, and Partner and Senior Member of the Group, Robert E. Braun, The HMA Handbook draws on articles from JMBM’s Hotel Law Blog and is the second book in JMBM’s “We Wrote the Book” series. In the book’s Foreword, James J. Eyster, professor emeritus of hotel finance and real estate at Cornell University’s School of Hotel Administration refers to the authors as lawyers who “work at the highest levels and cutting edge of the industry”.

CONTINUE READING →

Published on:

28 April 2010

Keywords:

Hotel Operating Agreement, HOA, Hotel Management Agreement, HMA, Hotel Management Contract, Management Contract. Hotel Operator, Hotel Manager, Hotel Owner. RFP for Hotel Manager. RFP for Hotel Operator, How to get a great hotel operator.

Terminology

Contracts between hotel owners and managers (or operators) controlling the management of a hotel go by various names. They are called hotel management agreements, HMAs, hotel management contracts or hotel operating agreements. For convenient reference, this article will generally use the term “Hotel Management Agreement” or “HMA.” However all these terms can be used interchangeably and mean the same thing, just as with hotel operator or hotel manager.

Whatever they are called, Hotel Management Agreements allocate risk between the hotel manager and the hotel owner. They are critical in determining the profitability and value of a hotel.

Hotel Management Agreement disputes are on the rise! The recent announcement about Banyan Tree Hotels & Resorts terminating its management contract at Banyan Tree Al Areen resort in Bahrain are amongst the latest proof of this trend

Hotel management agreements are a key factor in the success and value of a hotel — getting the right operator and a fair hotel management contract. And articles on hotel management contracts are some of the most frequently viewed items on www.HotelLawBlog.com. We have a rich library of resources on this topic – everything from “How to get a great hotel operator” and “ Helping Owners Strike a Fair Deal: 5 Milestones Marking The Road To Success For Hotel Management Agreements” to “How to terminate a hotel management agreement when an operator really deserves it!” or “Terminating hotel management agreements when things don’t work?.
A version of this article was first published on 28 April 2010 by Hotel Management Asia, a Questex Asia Ltd. publication, under the title, “Comment: Jim Butler on Hotel Management Agreements.”

CONTINUE READING →

Published on:

27 May 2009

Keywords:

Hotel Operating Agreement, HOA, Hotel Management Agreement, HMA, Hotel Management Contract, Management Contract. Hotel Operator, Hotel Manager, Hotel Owner. RFP for Hotel Manager. RFP for Hotel Operator, How to get a great hotel operator.

Terminology

Contracts between hotel owners and managers (or operators) controlling the management of a hotel go by various names. They are called hotel management agreements, HMAs, hotel management contracts or hotel operating agreements. For convenient reference, this article will generally use the term “Hotel Management Agreement” or “HMA.” However all these terms can be used interchangeably and mean the same thing, just as with hotel operator or hotel manager.

Whatever they are called, Hotel Management Agreements allocate risk between the hotel manager and the hotel owner. They are critical in determining the profitability and value of a hotel.

Hospitality Lawyer: Fixing hotel management agreements that don’t work.

What is one of the nicest acknowledgements of professional accomplishment a hotel lawyer might receive? In my book, being recognized by the New York Times as an expert in a core aspect of my legal and advisory practice is pretty close, and that is what happened yesterday in a Times article by Jonathan D. Glater about the increased friction between hotel owners and operators now erupting into litigation in the case of the Four Seasons Aviara and the Fairmont Turnberry.

As I said in another New York Times quote last month by Martha C. White, we are facing the prospect of hotel bankruptcies and foreclosures reaching levels not seen since the last big downturn of the 1990s.

And indeed, it is in difficult times like these when hotels fail to meet debt service — or even operating expenses — that owners and lenders become very frustrated with operators that prefer their own interests to those of the hotel. And that is why Jonathan Glater’s article was looking at two high profile emerging battles where owners are standing up to operators and saying, “I’m mad as hell, and I’m not going to take it anymore.”

Here’s how we see it.

CONTINUE READING →

Published on:

2 April 2009

Please see “troubled hotel loans – workouts, bankruptcies & receiverships” for the latest articles on troubled hotels.
How do you terminate a long-term hotel management agreement or HMA? The hotel bankruptcy trump card. This is an increasingly popular question regularly put to the hotel lawyers of JMBM’s Global Hospitality Group®.

CONTINUE READING →

Published on:

25 November 2008
Please see “troubled hotel loans – workouts, bankruptcies & receiverships” for the latest articles on troubled hotels.

Hotel Lawyer with some solutions for underwater hotel loans. The SAVE® Program stands for Strategies & Approaches for Value Enhancement

Today, we want to talk about the scenario where Lenders and Borrowers find that there is “not enough to go around” to take care of everyone, but we find a way to create significant additional value.

CONTINUE READING →

Published on:

Author of www.HotelLawBlog.com
5 February 2008
Hotel Lawyer on how to terminate a hotel management agreement when an operator really deserves it. The love-hate relationship between hotel owners and operators is as old as the institution of hotel management arrangements (going back to the 1970s). A good hotel operator can add up to 25% to the value of a hotel. A bad one can subtract the same amount or even more. In 20 years of focusing on the hotel industry, and specializing in representing hotel owners, developers and lenders in more than $50 billion of hotel transactions involving more than 1,000 hotels around the world, we have seen a lot of eager owners anxious to sign up with a big hotel brand, thinking that was the end of their worries. Often it is.

Often it is NOT. . .

But hotel owners don’t come to hotel lawyers to tell them how happy they are with a hotel operator. They either come to hotel lawyers to get help in signing up a hotel operator, or to complain about the unbearable financial pain caused by the incompetence, dishonesty and arrogance of their hotel operator. Sometimes the complaints are well-grounded and justify the termination of the long-term hotel management agreement, and perhaps even millions of dollars of compensatory and punitive damages. (See for example, the experience of our client in Ritz-Carlton breached contractual and fiduciary duties . . . When will hotel operators “get it”?).

[And for a wealth of related articles, see the “Hotel Management Agreement” topic on Hotel Law Blog.]

CONTINUE READING →

Published on:

Author of www.HotelLawBlog.com
1 February 2008
Keywords:

Hotel Operating Agreement, HOA, Hotel Management Agreement, HMA, Hotel Management Contract, Management Contract. Hotel Operator, Hotel Manager, Hotel Owner. RFP for Hotel Manager. RFP for Hotel Operator, How to get a great hotel operator.

Terminology

Contracts between hotel owners and managers (or operators) controlling the management of a hotel go by various names. They are called hotel management agreements, HMAs, hotel management contracts or hotel operating agreements. For convenient reference, this article will generally use the term “Hotel Management Agreement” or “HMA.” However all these terms can be used interchangeably and mean the same thing, just as with hotel operator or hotel manager.

Whatever they are called, Hotel Management Agreements allocate risk between the hotel manager and the hotel owner. They are critical in determining the profitability and value of a hotel.

Hotel Lawyer on hotel management agreements and operator breach of duty. It may be an exaggeration to say that “JMBM wrote the book on hotel management agreements,” but we certainly know the area and have at least written a few chapters in that book. We have been helping owners, developers and lenders with many hundreds of hotel management agreements over the past 20 years. We have negotiated, re-negotiated, terminated and litigated almost every aspect of them, so the only thing surprising about the latest jury verdict handed down on January 25, 2008 against Marriott International and Ritz-Carlton is that it shows a continuing disconnect of operators who choose to ignore their contractual and fiduciary duties. (Search “Management Agreements” at www.HotelLawBlog.com)

In this case, one of our clients owned the Ritz-Carlton Bali which was managed under a typical long-term, no-cut management contract. A few days ago, after a 3 week trial, a jury sitting less than 10 miles from Ritz-Carlton’s home office ruled that the management contract was breached by Marriott International and Ritz-Carlton, giving the owner the right to terminate the contract, awarding $382,304 in compensatory damages, $10 million in punitive damages, plus attorneys fees and costs to the owner. The Wall Street Journal published an article today by Tamara Audi on the case. How does this happen?

CONTINUE READING →