Different agreements under one label
In the hotel industry, hospitality agreement can refer to several different contracts. A management agreement puts a hotel company in charge of day-to-day operations for the owner, usually for fees tied to revenue and profit. A franchise agreement licenses a brand, its standards, and its reservation systems, while the owner or a third-party operator runs the property. Group and event contracts govern room blocks, meeting space, and food and beverage commitments for conferences, weddings, and corporate events. Each type has its own pressure points, and owners sometimes sign more than one for the same property.
Terms that drive disputes
For owners, the length of a management or franchise agreement and the cost of ending it early are usually the most significant terms, along with performance tests, approval rights over budgets and key staff, and obligations to fund renovations required by brand standards. New York is among the states that require franchise offerings to be registered and disclosed before sale, which affects how brands deal with prospective franchisees. For groups and events, attrition clauses, cancellation fees, minimum spend commitments, and force majeure provisions are where disagreements usually arise. Reviewing these terms before signing is easier than negotiating them after a slow season or a cancelled event.
Reviewing the agreement
Bring the draft agreement, any disclosure documents or brand standards incorporated into it, and your financial projections or event plans. For owners, we look at fees, termination rights, performance standards, and what happens if the property is sold or refinanced. For event contracts, we review how attrition and cancellation are calculated, what triggers force majeure, and how deposits are handled. We also check how the agreement interacts with any financing, leases, or other contracts affecting the property or event, since conflicting obligations are a common source of disputes. Lenders financing a hotel often require a comfort or recognition agreement with the brand or operator, and its terms deserve the same attention.
