Hotel management agreements: Balancing the interests of owners and operators

Abstract

Robert Schlup is a partner in the law firm of Bloch & Partner with offices in Zurich and Munich, specialising in advising hotel owners and hotel operators about any form of hotel-related transactions on a global basis. He is extensively engaged in all legal aspects of hotel development, financing and management and has represented several leading international hotel chains and many hotel owners in numerous countries. Robert has published a doctoral thesis on hotel management agreements and serves as a visiting professor in the Master in Hospitality Administration programme at the Ecole Hôtelière de Lausanne, where he teaches a course on hotel management agreements. He recently chaired a panel on the topic of balancing owners' and operators' interests in hotel management agreements at the International Hotel Conference in Monaco. Abstract This paper discusses the inherent conflict of interest between owners and operators under hotel management agreements and describes the most important business and legal issues that have to be observed from an owner's and an operator's perspective, respectively, when negotiating a hotel management agreement. At the same time, the paper gives an overview of the most significant contractual issues that should be covered in all hotel management agreements. The author concludes that only a balanced contract will allow both parties to achieve their business goals over time, and that the best approach to a balanced contractual basis is a mutual understanding by the parties of each other's main concerns.