It is common practice and often considered a “best practice” to begin the process of defining the owner-and-operator relationship under which a hotel operator/manager will be responsible for hotel management pursuant to a hotel-management agreement by first negotiating and executing a letter of intent. Why is this so important? The LOI describes the elements of the HMA that are considered crucial by owner and manager and is an excellent device for the complete illumination of crucial deal points in advance of negotiating the definitive agreements.
If the hotel is a highly desirable project, owner and owner’s team of consultants and lawyers can use the form of LOI offered by competing manager suitors during an RFP process to compare, contrast and distinguish one potential manager from another as part of the selection process.
LINKS
Read “The Global Consultant: How to Manage the Hotel-Management Agreement Letter of Intent” authored by Nelson F. Migdal for Hotel Management.