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Choosing the "right" Hotel Brand and Operator - HMA PRO™ Checklist from Jim Butler

publication date: Oct 4, 2016
author/source: Jim Butler, Author of Www.HotelLawBlog.com

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HMA PRO™ Checklist

Everyone agrees that the choice of the “right” hotel brand and operator may be one of the most significant decisions affecting the financial success and value of a hotel. The right operator will add significant value to the property, both on a current basis through better operations, and by enhancing the long-term value of the property. At the same time, the wrong brand or the wrong operator will reduce the current earnings of the property and the value of the property, making it harder to finance and resulting in a lower sales price.

Before your first contact with a hotel operator, you should carefully identify all of your unique ownership priorities and goals. We help clients accomplish this by walking them through our Comprehensive HMA PRO™ Checklist. In almost every case, it changes the operators you want to approach, how you approach them, and what you realize you need to accomplish from any exchange with operators.

The following is our Comprehensive HMA PRO™ Checklist, and most clients find time spent reviewing this checklist can be some of the most valuable in the entire process of recruiting a great operator. The checklist is a detailed list of more than 50 tier-1 and tier-2 business and legal issues which an owner needs to resolve prior to or during the earliest stages of negotiating the term sheet or
letter of intent (LOI) with the operator. We call these matters tier-1 for “must have” deal points, and
“tier-2” for “really want to have” matters that perhaps are not as crucial, but are still extremely
important. The tier-3 issues are more mechanical items that can be hashed out in the actual
negotiation of the hotel management agreement itself, after the term sheet or LOI is finished. In
addition, there are a variety of issues which can be specific to the transaction or the parties; however, the issues in this checklist are almost universally considered.

Jim Butler
1900 Avenue of the Stars, 7th Floor, Los Angeles, CA 90067 􀃘 (310) 201-3526 􀃘 (310) 712-8526 fax 􀃘 jbutler@jmbm.com 􀃘

This selection of strategies was shared as a starting point in your preparation to meet your obligations.  Check with all involved parties, industry and various brand standards and as many places as you can to make the best decisions for your facility.

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