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Call +40 123 456 789
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Hotel Management Lease Agreement

1. The landowner enjoys industrial stability and a near-guaranteed economic income. The landlord earns the fixed rent. It is often agreed that the owner will also earn a percentage of the hotel`s turnover/profits. On the other hand, hotel management contracts are an active investment: it is not only hotel property that needs to be actively managed; In this type of investment, everything revolves around the operational side of the hotel, with all its opportunities and risks. The managing company serves only as an operator for the owner of the land. Typically, the manager receives a commission on turnover or for-profit and does not bear economic risks, as the hotel owner is generally responsible for the employment of the majority of the hotel`s staff, with the exception of certain members of the management. The operator therefore has a duty of care, a duty of notification and an obligation to provide the owner with the funds and other goods he receives as part of his administrative activities (i.e. the revenue described in Articles 640 to 642 of the Cambodian Civil Code). In this context, the parties will develop an administrative arrangement that will impose most of the legal and commercial liability on the owner. The agreement will place a strong emphasis on balancing an effective and cost-effective management and incentive mechanism, while leaving the landowner with full control over transparency and control mechanisms.

Due to a gradual shift in hotel investment trends, owners have become more demanding in the choice of operators and in negotiating contractual terms. In recent years, it has become increasingly common for institutional and financial investors and private equity funds to invest in hotel facilities. A background: on a global scale, until 1949, hotel owners were also the hotel managers. Between 1949 and 1963, most transactions were made on the basis of leases, while Hilton International did not conduct the first hotel management operation in Hong Kong until 1963. Since then, most hospitality transactions in the United States and Europe have been based on management agreements, while in Israel, as has already been mentioned, the parties prefer leasing contracts. Based on reports from the main hotel organisations in Europe (Germany, Austria, Switzerland, Italy, the United Kingdom, Spain and France), hotel owners who use management contracts can generally benefit from an average EBITDA of between 19% and 21% of the hotel`s total turnover. Hotels belonging to international chains can deviate significantly from these values. Compared to leases, the risk premium may be 5 per cent or more of the hotel`s operating turnover.