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Volume XI, Number 212

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Hotel Collections Continue to Thrive

Owners of strong, unique independent hotels are finding that they can gain many of the advantages of an affiliation with a branded hotel management company without entering into a management contract and relinquishing control of the hotel.  This is indeed the case and much has been written about the many collections of hotels now available in the marketplace, but the benefits should be approached with a clear head and a keen eye because at the end of the day there will be a signed collection agreement signed with the branded hotel management company that will have a significant term of years and that will not be subject to easy termination by the hotel owner.  To acknowledge the positives of the relationship, an owner with a hotel that has a unique story and that is recognized in its target market can benefit from the brand’s strength as a part of the underwriting process for financing, as well as better access to a rewards program, reservation system, buying power and training.  Nevertheless, remember that the collection contract is essentially a franchise agreement, with a significant term and fees to be paid to the brand.  The fees are not uniform, so care must be taken in examining that aspect of the transaction.  The variations on fees include fees based upon total gross revenues or total rooms revenues or simply the bookings through the brand’s systems.  If the owner is not going to self-manage the hotel, the better practice would be to involve the hotel manager in the process because the hotel manager will need to understand its duties and obligations to the owner in the context of being part of the collection.

To make the point, in early November 2015, Starwood rebranded the SLS-Las Vegas as part of the Tribute Portfolio, with the Lux Tower operating under the W brand. The Tribute Portfolio is the second collection of hotels offered through Starwood, joining The Luxury Collection of hotels.  Other examples of branded collections include Marriott’s Autograph Collection, Hilton’s Curio Collection, Sofitel’s Legends Collection, the BW Premier Collection from Best Western and the Ascent Hotel Collection of Choice Hotels.

©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume V, Number 320
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About this Author

Nelson Migdal, Greenberg Traurig Law Firm, Washington DC, Real Estate Law Attorney
Shareholder

Nelson F. Migdal is Co-Chair of the Hospitality Practice. He focuses his practice on the acquisition and disposition of hotels, hotel operations and management, franchising, licensing and branding, development and finance, large mixed-use projects, hotel management agreements, licensing agreements, commercial real estate acquisition and sale, and commercial leasing.

He has prepared and reviewed management and franchise agreements, purchase and sale agreements, multiple building covenants, and other documents related to the acquisition, financing...

202-331-3180
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