Operator selection search and renegotiations
Operator selection search
Selecting the correct hotel operator, assessment of brands and concepts are always based on our industry knowledge and the unique commercial situation of the hotel or hotel project with regards to location, market, and economic conditions.
- Market conditions
- Utilization of commercial areas / room program
- Choice of concept / brand / operator
- Evaluations of tenant's turnover potential
- Expected rental income and cash flow for owner
- Head of terms / demarcation list / lease agreement
These are some of the topics considered in a Due Diligence process. Identifying the correct brand and operator is crucial for the success and market value of any hotel. Using the assistance of an expert in hotel branding, negotiations, and lease- and management agreements can be the difference between capitalizing on a successful financial partnership and years of struggles in an unbalanced relationship.
Renegotiations
The lifespan of a hotel lease- or management agreement is typically 15-20 years, regulating large values for both parties. Entrusting a seasoned consultant with the required industry insights, commercial knowhow, and experience from negotiating hospitality agreements is therefore crucial.
Lease- or management agreements requires constant review, and renegotiating terms should not be done solely at the expiration of an existing agreement. Changes in operating concept, capacity alterations, renovations or other large investment projects are all situations that should trigger a renegotiation process. A renegotiation should be linked to changes in market conditions, being forecasted growth or changes in market capacity. Hotelia can assist its clients identifying the correct timing for when to initiate renegotiations, mitigating risks, and optimizing revenue streams by ensuring an agreement adapted to the current market conditions.
