Hotel management agreement trends in Asia Pacific

Hotel management contracts are becoming longer, management fees have decreased over the past five years, while sales and marketing fees have increased across Asia Pacific

The 2024 Hotel Management Contract Survey is the most thorough study of its kind in Asia Pacific, analyzing approximately 400 hotel management agreements (HMAs) over the past two decades. This year's edition includes 145 agreements signed between 2018 and 2023, the largest sample ever studied in Asia Pacific, contributing to the ongoing 20-year analysis.

Key takeaways

• A growing factor influencing the duration of HMAs is the fee structure. The survey shows that the average base fee in contracts has decreased slightly, from 1.7% to 1.6% of revenue. In addition, incentive fees are increasingly tied to performance and operate on a sliding scale based on gross operating profit thresholds;
• A significant trend over the past 20 years has been the rise of performance termination clauses, which are now found in 93% of hotel management contracts;
• Looking ahead, JLL and Baker McKenzie predict that hotel owners in Asia Pacific will increasingly diversify their operating models. Beyond traditional hotel management contracts, franchise, manchise and white-label operators are expected to become more prevalent.

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