Management contract negotiation is complex, particularly considering that most operators have a far greater level of experience when it comes to management contracts. The management company’s strong position is further exacerbated in Africa, where initial base management contract proposals have been more regressive, requiring a significant amount of management contract negotiation to reach a mutually beneficial, equitable, and balanced contract.
Prior to entering into a management contract negotiation, operators require a hotel concept to offer levels of quality, design, and safety that are aligned with their brand specifications. It is therefore critical that the management contract negotiation process takes place prior to the development of the hotel, so that the operator can provide input into the overall design of the property. The management contract negotiation process should usually commence once the viability of a hotel investment has been determined.
Specialist hospitality experts like those at HTI Consulting have extensive experience in management contract negotiation, having conducted more than 20 assignments in the last two years. From a management contract negotiation point of view, HTI Consulting has negotiated contracts with a number of leading global brands, including Radisson Hotel Group, Hilton Worldwide, Minor Hotels, Sarovar Hotels & Resorts, CityBlue Hotels, and Marriott International. The countries where we have undertaken management contract negotiations include Botswana, Ghana, Kenya, Mauritius, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.
Through strategic management contract negotiation, HTI Consulting has been able to deliver significant cost savings for clients. In our most recent management contract negotiations, we were able to save our clients over USD 500 000 in management fees in the first ten years of the 20-year management contract.
The key to a successful management contract negotiation is maintaining a balance between the needs of the owner and operator, and a management consultant with the required knowledge and expertise to understand the balance needed. Contact HTI Consulting for any of your management contract negotiation requirements.