Standard Hotel Management Agreements Seen as Obsolete by 2026, Prompting Owners to Demand Better Alignment
🏨 In 2026, hotel management agreements (HMAs) are outdated, failing to align with owners' interests due to factors like AI infrastructure costs and elevated interest rates. Standard agreements offer a base fee of 2-4% of revenue and an incentive fee of 10-20% of Gross Operating Profit (GOP). This approach doesn't account for debt service or owners' returns. Owners, now more informed, are negotiating aggressively for performance-focused fee structures, Manchise agreements, and asset management frameworks.
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