A New Approach to Hotel Management Fees

Marcus R. Lee | April 26, 2024

By Marcus R. Lee In the ever-evolving hospitality industry, the question of how to effectively compensate hotel operators remains crucial. While the basic premise of paying managers for their management skills holds true, the prevalent incentive fee structures may no longer adequately align with market realities, particularly for owners. Management Fees Breakdown Hotel management companies earn fees through three main avenues: In the typical hotel management agreement, hotel management companies are typically paid a base fee equal to 2.0% to 4.0% of total operating revenue—3.0% being the most common—plus an incentive, typically an...