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Related reading: HMA vs franchise · How to negotiate an HMA
A hotel management agreement (HMA) is the contract between an owner and an operator that runs the hotel day to day. The owner keeps the asset. The operator runs the business under fee, control, performance, and exit rules.
What an HMA is
The owner contributes capital and real estate. The operator contributes systems, people, and operating expertise (and sometimes brand access).
The agreement sets authority boundaries, economics, and how either side can exit. It is one of the most consequential documents an owner signs.
How it differs from franchise
Under management, the operator actively controls the property. Under franchise, the owner or a third-party operator runs the hotel and licenses the flag.
- HMA: operator-led day-to-day control
- Franchise: brand systems without brand management (unless separately contracted)
- Hybrid: franchise with a brand plus a separate third-party management agreement
Term and renewal
Most HMAs run 10-25 years with renewal options. Full-service and luxury skew longer; select-service shorter.
Watch automatic renewals that require 12-24 months' notice. Missing notice can lock you in.
Management fees
Base plus incentive is the core structure.
- Base fee: often 2-4% of gross revenue, paid regardless of profit
- Incentive fee: share of GOP or NOI above a threshold; GOP definition is everything
Owner priority return
Some deals pay the owner a minimum return before incentive fees. Demand it when operators compete for the project.
Performance tests and termination
Objective tests (often RevPAR vs comp set) should create a real path out after sustained underperformance.
Negotiate measurement method, cure window, and remedy. Operators will resist. Owners should not.
Approval rights
Keep owner approval on material capex, key executives (at least GM), brand renewals, and anything that encumbers the asset.
Assignment and change of control
Sale of the hotel or sale of the operator can destroy exit value if assignment is blocked or messy.
Negotiate clean transfer rights so buyers can underwrite the asset.
Often overlooked
- Centralized service charges beyond base fee
- FF&E reserve funding and control
- Owner audit rights
- Governing law and dispute venue on cross-border CALA deals
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.