Administrative costs also need to be reviewed, as more hotels are converted to hospitals or offer their beds to medical staff. This is a temporary adjustment for the duration of the pandemic. There are many clauses within a HMA that may need to be revised and rethought when current contracts are amended or new contracts are developed. It will be a renegotiation process, because a long-term agreement is probably in place. Below are some of the most important areas you should focus on if you are able to renegotiate your current agreement or keep an eye on future contracts. Many of the following changes require the consent of lenders, but this document will not be availab reviewed on Diesbel businesses. Another reason to reassess the force majeure clause is to determine how to use it for the future of a property. If, at the expiry of the leniency disclosure, certain conditions and obligations have not yet been met, the owner or operator is free to adopt a case of force majeure to terminate the contract. For example, if the owner feels that the hotel`s business model is too risky and wants to transform the hotel, he can use force majeure as a reason for terminating the contract. This should be implemented with caution. If the termination is perceived for a reason other than the effects of COVID-19, this could result in legal action and ongoing litigation.
Of course, there are two parts to each agreement. However, as an asset manager, it is our responsibility to protect the interests of the owner, as the content below will see. Nevertheless, it is essential to recognize the importance of the operator`s rights. After all, everything revolves around the hotel and each party will have to make concessions to support its sustainability. Consider incorporating an exclusion clause that outlines the above for the future. Be prepared and adjust the fees according to the location of each hotel. With Alex Sogno (CEO – Senior Hotel Asset Manager at Global Asset Solutions). Mr. Sogno began his career in New York after graduating with honors at the Ecole Hételiére in Lausanne, Switzerland. He came to HVS International New York and founded a new company at cushman`s wakefield headquarters in Manhattan.
In 2005, Mr. Sogno began working for Kingdom Hotel Investments (KHI), founded by HRH Prince Al-Walid bin Talal bin Abdul Aziz Al Saud, a member of the Saudi royal family, and managed various hotels, including Four Seasons, Fairmont, Raffles, M-venpick and Swisstel. He also participated in KHI`s initial public offering (IPO) on the London Stock Exchange and the Dubai International Financial Exchange. Mr. Sogno is also co-author of the “Hotel Asset Management” manual published by the Association of Hospital Asset Managers (HAMA), the American Hotel – Lodging Education Institute and the University of Denver. He is the founder of the Asia Pacific Hospital Asset Managers Association (HAMA AP) and The Middle East Africa (HAMA MEA). Once again, management agreements should reflect the interests of both parties and, while the above provisions take into account the owner`s point of view, the terms of the brands and operators should be respected. At the end of the day, the two parties should work together to preserve the hotel.
COVID-19 has introduced the hotel industry in many uncertainties for the future. Several vulnerabilities and areas of risk have also been identified through hotel management agreements (HMAs). As these weaknesses become more evident, it is important to decide on what areas they focus, how to adapt them in the future, and how each party can make the necessary adjustments to help each other.