4 December 2013
Hotel Lawyer on the jump in hotel development and investment activity.
These are getting to be pretty exciting times to be in the hotel business. Hotel industry fundamentals have continued to improve since the Great Recession and none of the experts see a particular event or reason that fundamentals will stall. Although occupancy growth rate is slowing in some sectors, ADR growth generally continues to drive greater profits to the bottom line.
All this activity creates “management agreement opportunities”
New development is finally coming back, and 2014 may be a break-out year for long-delayed projects. The volume of purchase and sale transactions continues to grow. And owners or investors are seeking to maximize hotel value by repositioning existing assets.
The confluence of these factors is creating a lot of hotel management agreement opportunities for hotel brands, operators and owner/developers.
The 2 most important things affecting the value of your hotel
In the midst of all this activity, hotel developers and investors should remember that two of the most important things they can do with their hotel asset are to
- Choose the “right” brand and operator
- Negotiate a management agreement that preserves a reasonable amount of value, control and flexibility
And . . . get practical guidance on these issues from experienced veterans representing your interests (and only your interests) at the earliest possible time in the process.
New White Paper on short term management contracts
In case you missed it, Hotel Management recently published an excellent white paper that is highly relevant to all of these hotel management agreement opportunities. The article is called, “The Evolution of Short-Term Management Contracts“. Click here to download a PDF of the article.
This white paper discusses the benefits of the short-term management agreements offered by third-party management companies such as that of our client, Hostmark Hospitality Group. (The white paper includes photos of Hostmark-managed properties including the 521-room Holiday Inn Chicago-Mart Plaza Hotel, the 239-room Embassy Suites Irvine-Orange County Airport, and the 176-room Lake Eve Resort in Orlando.)
The white paper also quotes my partner Robert Braun and me, and refers to our major reference work on hotel management agreements — HMA Handbook – Hotel Management Agreements for Owners, Developers, Investors & Lenders.
The HMA Handbook’s 3 parts provide extensive information on the following subjects:
Part 1: How to get a great hotel operator
Part 2: What you need in your HMA
Part 3: How to terminate an HMA
Also included in the white paper is the full text of my article, What Marriott v Eden Roc Means for Terminating Management Agreements.
In this important case, an appellate court ruled that a hotel owner can terminate a long-term hotel management agreement with its operator even when the contract expressly provided to the contrary and waived any rights of termination.
More information about hotel branding and management
The right hotel brand and management agreement can be the difference between success and failure of a hotel. JMBM’s Global Hospitality Group® has negotiated, renegotiated, litigated and advised on more than 1,000 hotel management and franchise agreements all over the world. To see how we help clients in this arena, please click here to see our brochure. (See particularly pages, 8,9, and 11).
We also have a rich library of free resources available on most topics of interest to people dealing with hotels. These are all available at www.HotelLawyer.com.
For blog articles, scroll down any page of HotelLawyer.com and look on the right side. For example, you can see all the blog articles on “Hotel Franchise & License Agreements” by clicking that link. The same goes for “Hotel Management Agreements” or any other subject you see listed down the right hand side of HotelLawyer.com.
You will also find our free handbooks on HotelLawyer.com under the “Resource Center” tab, such as
The HMA Handbook, Hotel Management Agreements for owners, developers, investors and lenders
This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $87 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who’s your hotel lawyer?
Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $125 billion of hotel transactions, involving more than 4,700 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or +1 (310) 201-3526.
Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group®. Jim is one of the top hospitality attorneys in the world. GOOGLE “hotel lawyer” and you will see why.
Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.