Demystifying Hotel Management Agreements with Focus on Operator Efficiency

Olivier Harnisch | April 17, 2018

By Olivier Harnisch The Middle East region has generally been following the traditions and operating models of the global hospitality industry. Developers typically build hotels and leave the responsibility of running them to hotel operators via a hotel management agreement (HMA). Operators receive a remuneration consisting of a combination of "base fee" linked to a percentage of revenue and "incentive fee" based on a percentage of gross operating profit. While this agreement has worked well in the past, today there are several factors that raise questions, which are relevant to hotel owners and operators. Key among this is the transfor...