Robert Mandelbaum and Tim Dick, Ph.D. | May 4, 2023
By Robert Mandelbaum and Tim Dick, Ph.D. Most management contracts include an incentive management fee in addition to the base management fee. The incentive fees are designed to make management more conscious of the bottom line since owners achieve their returns and pay their debts from profits, not revenue. Incentive management fees are earned by the operator once a designated profit threshold is achieved. Given the depressed performance of hotels during the 2020 industry downturn, unsurprisingly almost no hotel owners paid an incentive fee to their managers that year. Fortunately for U.S. hotel operators, incentive fees have risen con...
David Lund | December 2, 2019
By David Lund Being a branded or franchised hotel is an expensive endeavor. Especially when you consider the average agreement is 20 years in duration and you’re on the hook for the fees outlined in your agreement plus anything else the management company throws at you. When I say on the hook, I mean they can literally charge you for whatever they want as long as they determine it is in your best interest. This is the basic concept that forms the meat of the management or franchise agreement. When you consider the cost of the fees there are some terms you will want to get familiar with. Terms that are part of your hotel management ...
Robert Mandelbaum | July 13, 2017
By Robert Mandelbaum The U.S. lodging industry recovery from the depths of the great recession was characterized by strong growth in rooms revenue (RevPAR), concurrent with strict cost controls. This combination resulted in double-digit growth rates for profits from 2010 through 2014. Starting in 2015, market conditions changed. The pace of RevPAR growth slowed down, while expenses increased at their highest level of real change in the past 20 years. With RevPAR growth forecast to be somewhat muted for the next few years, the attention of owners and operators has how shifted on controlling expenses. An expense that has consistently g...
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