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Related reading: What is an HMA · HMA vs franchise
The operator's first draft is an opening position, not a final offer. Experience asymmetry is the real problem: operators negotiate these every year; most owners do it a few times in a career.
These six terms separate an owner-protective HMA from a 15- to 20-year lock-in.
Why the standard draft favors the operator
In markets across Mexico, Central America, Colombia, and the Caribbean, owners often receive a "standard" form with little apparent room to move.
Every material term is negotiable. Resistance is often highest where the operator relies on the owner not knowing market comps.
1. Performance test and termination right
This is the exit path if results fail on a sustained basis.
- Dual test: vs approved budget and vs competitive set
- Annual measurement, not multi-year averages that hide bad years
- Short cure (for example 60 days, not 6-12 months)
- Termination without penalty after repeated failures in a defined window
2. Base fee vs incentive fee
Base pays regardless of profit. Incentive is where alignment is won or lost.
- Lower base and higher uncapped incentive when competition exists
- Incentive only after owner priority return
- Base deferrals in force majeure, renovation, or displacement
- No double-dipping on purchasing, FF&E, or vendor relationships
3. Budget approval rights
Annual budget approval must be real, especially with inflation and FX volatility.
- Express approval for capex above a defined threshold
- Deadlock rules when parties disagree
- Independent auditor rights without operator consent
- Direct access to operating accounts and agreed accounting system
4. Cure and intervention rights
If the operator is failing, weak cure language leaves you watching your own asset.
- Owner cure rights with account access
- Temporary intervention in defined emergencies
- Ability to act against third parties without operator signature
- Separate operator vs brand rights when entities differ
5. Termination for convenience
Operators resist this hardest. Owners need it most when strategy, capital, or market conditions change.
- Right starting year 5 or 7 of the initial term
- Declining termination fee schedule
- Reciprocity if the operator can walk
- Clear transition protocol for ops, staff, and reputation
6. Key personnel and replacement
You hire people as much as systems. Protect GM continuity and replacement approval.
- Named key people with owner approval on replacements
- Removal rights for documented cause
- 90-day transition if GM changes in first two years
- Annual key-person performance reviews in owner reporting
What strong operators will accept
Serious operators accept most of these terms when the project is real and competition exists.
Flat refusal on performance tests, convenience termination, or budget rights is information about expected performance and confidence.
A clearer way to run this process
Dealality is hotel deal-making done as a clear confidential process. We help owners see real options, talk to the right brands and operators, compare offers side by side, and choose the best path for the hotel before they commit.
Same hotel. Different process. Different outcome.
Start at dealality.com.
Joan Dejarden is the founder of Dealality, a confidential platform for hotel brand and operator selection. He has seen both sides of hotel deals across the CALA, Americas, and Europe.