Of course, every agreement has two sides. However, as an asset manager, it is our responsibility to protect the interests of the owner, as can be seen in the content below. However, it is essential to recognise the importance of the rights of the operator. Finally, everything revolves around the hotel and each party must make concessions to support its successful sustainability. B. If an existing management contract is not renewed or if a new management contract is not concluded before the expiry of the contract, the existing contract remains provisionally in force for a maximum period of one year. If the administrative agreement has not been renewed at the end of the provisional period of one year or if a new agreement has not been concluded, the public institution shall not exercise this restructured operational power until it has concluded a new administrative agreement with the Commonwealth. A management contract is an agreement where by which operational control of an undertaking is contractually entrusted to a separate entity that performs the necessary management functions for a fee. Management contracts not only involve selling a method to do things (like franchising or licensing), but they actually include. A management contract can include a large number of functions, such as.
B technical operation and a production site, personnel management, accounting, marketing services and training. The main objective of this agreement is that investors in some hotels do not have the capacity and knowledge to operate them. They are only businessmen who have a good financial situation. They lack experience or expertise in this area. Therefore, they need the support of these management companies who can obtain the production of their investment.  The most fundamental element of control that an owner will have is the right to approve the hotel`s operating budget. The owner should maintain strict control over the budget process and expenses should be made in such a way that they match the budget as soon as it has been approved by the owner. If, for any reason, the owner and the management company are unable to agree on a budget within a reasonable time after its submission (which should take place at least annually), the parties should agree to separate and terminate the contract.
The management company will often endeavor to negotiate some form of lump sum damages in the event of termination after the failure of the budget agreement. The owner may object to this and perhaps have the feeling that the management company could arbitrarily propose a much higher budget than is necessary, knowing that the owner will not approve it. In this case, the management company is licensed and is therefore entitled to lump sum damages. Ultimately, the parties must agree to work in good faith towards a budget that is acceptable to both parties and rely on each acting prudently during the budget process. Obviously, the owner might want to control the management company`s ability to make decisions regarding some or all of the issues described above. What kind of control should an owner have and what can be reasonably expected to maintain some degree of influence over the management company while giving it the kind of independence that the management company deems necessary to perform its work properly? What services does a management company need to provide you? This is the most important question to ask when negotiating with a management company. .