Hotel Management Agreement Template

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HOTEL MANAGEMENT AGREEMENT
for
___________________________________
BETWEEN
______________________________
- and –
___________________
Dated as of ________________ ___, ____
WDC 372878905v2
HOTEL MANAGEMENT AGREEMENT
for
___________________________________
BETWEEN
______________________________
- and –
___________________
Dated as of ________________ ___, ____
WDC 372878905v2
HOTEL MANAGEMENT AGREEMENT
for ____________________________
THIS AGREEMENT is made as of _________________, ____.
BETWEEN:
______________ a ______________ limited partnership (“Owner”);
AND
_____________ a _________ limited liability company (the “Operator”);
AND WHICH AGREEMENT IS JOINED IN, AND CONSENTED TO BY:
___________________ a United States banking corporation, as trustee (the “Trustee”)
under that certain land trust agreement with Owner, numbered ____________, and dated
_____________ (the “Land Trust”).
R E C I T A L S
A.
The Trustee holds fee simple title to the Hotel, excluding the __________, for the benefit
of the Owner, and will, in accordance with the terms of the Land Trust, convey fee simple title to the
Hotel, excluding the __________, to the Owner.
B.
Owner has leased the __________ pursuant to the ______ Lease and also has certain
easement access rights to the ____________ pursuant to the ________ Access Easement.
C.
The Operator has or has access to expertise in the acquisition, development, construction,
furnishing, equipping, marketing, maintenance, operation, management, supervision and direction of
hotels, including Full Service Luxury Hotels;
The Owner wishes to obtain the benefit of the Operator’s expertise in advising and
D.
providing services to hotel owners in connection with the furnishing, equipping, marketing, maintenance,
operation, management, supervision and direction of Full Service Luxury Hotels, and the Operator has
agreed to provide such advice and services to the Owner in connection with the Hotel upon and subject to
the terms and conditions set forth in this Agreement; and
E.
The Owner also wishes to obtain the use of the Proprietary Materials for the benefit of the
Hotel, and the Operator has agreed to make available the Proprietary Materials to the Owner for the
benefit of the Hotel, upon and subject to the terms and conditions set forth in this Agreement.
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A G R E E M E N T
NOW THEREFORE in consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt and sufficiency of which each Party acknowledges, the Parties
covenant and agree as follows:
ARTICLE I.
INTERPRETATION
1.1
Defined Terms
In this Agreement, unless the subject matter or context otherwise requires, the following terms
shall have the following meanings:
“Accounting Principles” means, at any time, those accounting principles applicable to the hotel industry
which are recognized as being generally accepted in the United States, as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board, all as
modified to reflect hotel operating accounting principles recommended by the Uniform System of
Accounts for Hotels adopted by the American Hotel and Motel Association of the United States as in
effect from time to time.
“ADA” means the American with Disabilities Act (42 USC 12181 et seq.) or any equivalent state or local
law or ordinance.
“Affiliate” means, with respect to any Person, any other Person which, directly or indirectly through one
or more Persons, Controls, is Controlled by, or is under common Control with, such Person.
“Agency Account” means the bank account to be maintained pursuant to Section 7.5.
“Annual Budget” means the annual budget approved pursuant to Article 4.
“Applicable Laws” means all laws, statutes, regulations, codes, bylaws, ordinances, treaties, orders,
judgments, decrees, directives, rules, guidelines, policies and other requirements of any Governmental
Authority having jurisdiction, whether or not having the force of law, including without limitation, the
Environmental Laws and the ADA.
“Approval Amount” means $____________ as adjusted by the Index Ratio.
“Approved Bank” means any bank selected by Operator and reasonably approved by the Owner.
“Basic Fee” has the meaning set forth in Section 9.1.
“Building Systems” means, the systems and related facilities necessary for the Operation of the Hotel,
including, without limitation, all life/safety, heating, ventilation, air conditioning, elevator, escalator,
telephone, computer, electrical, plumbing, sanitation, laundry, dry cleaning, kitchen, mechanical and
other systems and facilities.
“Business Day” means a day, other than a Saturday, Sunday, or statutory holiday, on which banks are
open for the transaction of business in both the City of _________, ________ and the city in which the
Hotel is located.
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“Capital Expenditures” means expenditures for or on account of Capital Improvements.
“Capital Improvements” means all alterations, additions, replacements and improvements to the Hotel
that are considered to be of a capital nature under the Operator’s Accounting Policies, including, without
limitation, Building Systems, Furniture, Fixtures and Equipment, structural repairs and changes or
replacements of structural components, but excluding repairs and maintenance and Building Systems and
Furniture, and Equipment expenditures properly chargeable as Operating Expenses.
“Casualty Compensation Payment” means a payment pursuant to Article XIII equal to: during the first
_______ (____) years of the Initial Term of this Agreement: _____ and one-half (__.5) times the
Management Fees earned by Operator for the ________ (__) month period preceding the applicable
termination (if there has not been one complete ________ (__) month period under this Agreement prior
to such termination, then the Management Fees that would have been earned by the Operator for the
_______ (__) month period under the Annual Budget for such Fiscal Year as though all projections
therein were realized); during the second ______ (__) years of the Initial Term of this Agreement: ______
(__) times the Management Fees earned by Operator for the _________ (__) month period preceding the
applicable termination; during the third _____ (__) years of the term of this Agreement: ______ and one-
half (__.5) times the Management Fees earned by Operator for the ________ (__) month period preceding
the applicable termination; during the fourth ______ (__) years of the term of this Agreement: _______
(__) times the Management Fees earned by Operator for the ________ (___) month period preceding the
applicable termination; and during the last _______ (__) years of the term of this Agreement: ______ and
one-half (__.5) times the Management Fees earned by Operator for the ______ (__) month period
preceding the applicable termination.
“Centralized Services” has the meaning set forth in Section 6.2.
“Commencement Date” means the date that Owner closes on its acquisition of the Hotel, excluding the
__________________.
“Comparable Aggregate Cost Test” has the meaning set forth in Section 3.8.
“Competitive Set” means, from time to time during the Operating Term, the (not less than ______ (__)
and not more than ________ (__)) hotels in the Hotel’s immediate market area that are most comparable
to the Hotel in quality, price and market (with due consideration given to age, quality, size, amenities,
amount of meeting space and business mix). Owner and Operator agree that, as of the Effective Date, the
hotels that would be included in the Competitive Set are those identified in the Schedule 1.1(a) as the
Competitive Set. All determinations as to which hotels are to be included in the Competitive Set shall be
made by the mutual agreement of Owner and Operator or, if the Owner and Operator are unable to reach
agreement, as determined by the Hotel Expert. In the event of a material change to any hotel in the
Competitive Set, including, but not limited to, the cessation of operation of a hotel, or a material change
in the standards of operation of a hotel, either Owner or Operator may request the replacement of such
hotel in the Competitive Set, provided the replacement hotel has been in operation for at least ______ (__)
full years. If the Owner and Operator cannot agree on a replacement hotel for the Competitive Set, the
matter may be submitted by either Owner or Operator for resolution to the Hotel Expert.
“Complete Destruction” means the destruction of or damage to the Hotel by fire, casualty, or any other
cause whereby the destruction of or damage to the Hotel is such that the cost of repairing, rebuilding or
replacing the Hotel exceeds ______ percent (___%) of the Replacement Value of the Hotel.
“Control,” “Controlled” and similar expressions mean a relationship between two Persons wherein one
of such Persons has the ability, through the ownership of securities or otherwise, to direct or manage the
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affairs of, or to make the business decisions of, or for, the other of such Persons, and includes, in the case
of a corporation, the ownership, either directly or indirectly through one or more Persons, of voting
securities of such corporation carrying more than ______ percent (___%) of the votes that may be cast to
elect directors of such corporation either under all circumstances or under some circumstances that have
occurred and are continuing, other than securities held as collateral for a bona fide debt, provided that
such votes, if exercised, are sufficient to elect a majority of the directors of such corporation.
“Core Executive Staff” has the meaning set forth in Section 5.3.
“Corporate Design and Construction Fee” has the meaning set forth in Section 10.4.
“Dispute” has the meaning set forth in Section 19.1.
“Employee Benefits” means the benefits provided to the Hotel Staff in connection with their
employment, which may include, without limitation, a pension plan, medical insurance, life insurance,
travel accident insurance, and bonus and service award programs.
“Employee Expenses” has the meaning set forth in Section 5.2.
“Environmental Laws” means all applicable federal, state, local, and foreign laws and regulations
relating to the pollution of the environment (including without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation laws and regulations relating
to emissions, discharges, releases or threatened releases of Hazardous Materials or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
Environmental Laws shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal Insecticide, Fungicide,
and Rodenticide Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
and the Superfund Amendments and Reauthorization Act of 1986, all as amended from time to time.
“Extension Term” means a period of _______ (__) consecutive Fiscal Years.
“Fiscal Year” means a calendar year, provided that the first Fiscal Year shall be the period commencing
on the Commencement Date, and ending on _______ of the year in which the Commencement Date
occurs (sometimes referred to as the “initial Fiscal Year”), and provided that the final Fiscal Year may be
less than a full calendar year if this agreement is terminated early.
“Force Majeure Event” means any act of God, labor dispute, shortage of labor or materials, earthquake,
hurricane, flood, fire or other casualty, taking, civil commotion, riot, mob violence, insurrection,
malicious mischief, sabotage, rebellion, act of public enemy, terrorism, war, invasion, embargo or other
event beyond the reasonable control of the Party claiming the benefit of the event, including any material
and adverse changes in general economic or market conditions directly or indirectly resulting from the
foregoing conditions, but excluding the inability of a Party to meet its financial obligations.
“Full Service Luxury Hotel” means a full service luxury resort and conference center as understood in
the international hotel industry and having development, construction, operating, service and maintenance
standards at least equal to those of other similar resort hotel facilities which are Operator Hotels.
“Furniture, Fixtures and Equipment” means all furniture, furnishings, fixtures and equipment required
for the proper and efficient Operation of the Hotel in accordance with the Standard, including, without
limitation, lobby furniture, carpeting and floor coverings, draperies, wall coverings, artwork, bedspreads,
television sets, radios, office furniture and equipment such as safes, cash registers and accounting,
Hotel Management Agreement
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WDC 372878905v2

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