Management contracts can also ensure greater continuity for an organization. The contracting company may change the individual managers during the course of the contract, but the standards established at the beginning of the business remain in place. This means you don`t have to worry about performance or style changes because you`ve set the terms of the deal. For example, you would have identified the expectations and different processes that the management company could or should not use as part of operational control. As a result, you can continue to enjoy the same level of function and efficiency without worrying about how personnel changes might affect your business. Bindseil v. McDonald`s illustrates the importance of causality. Although Mr. Often seen as proof of the operator`s genuine interest in engagement, key money can be a valuable resource to help a brand without the high development costs of expanding into new markets and signing the deal for trophy assets. Many operators offer the key money in the form of a “loan” to the owner, which can be either for the development of the hotel or its pre-opening, or for part or all of the renovation in the event of a re-brand change of an existing hotel.

However, key money is at the expense of something else, usually higher fees and/or longer-term. In addition, almost all operators require the owner to reimburse a pro-rata amount of the unpaid key money with or without interest if the contract is terminated before the end of the term or an agreed part of it. An increasingly common instrument is a minority stake, in which the operator makes a financial contribution in exchange for a stake (less than 5% to 30%) in the hotel property. Under such an agreement, if the hotel is functioning well, the operator directly realizes a return on investment. Equity contributions from management companies can help reconcile the interests of the owner with those of the management company. .

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