Working with owners special

Pullman's Laurent Chaudet believes that any owner-operator relationship has to be built on trust and transparency - this way complications are less

In black and white
“If an operator asks for this clause I believe that no owner will sign any agreement,” explained Siegfried Nierhaus, managing director of Atlas Hospitality, who does not mince his words at the prospect of a non-interference clause being written into any of the contracts he has with his operators.

“As management contracts are generally signed for a long period of time (a minimum of 10 years), I believe that important decisions have to be carried out with a long-term relationship in mind,” he continued.

“Signing a management agreement between an owner and an operator should be seen by all parties as a great opportunity to make better business for the benefit of both the owner and the operator.”

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Klitscher is equally vehement in his refusal of the clause: “I don’t believe in it anyway. I don’t think it ever gets enforced. I don’t see how it is possibly enforceable in any way, shape or form. I’ve never known anyone to enforce it. I think it’s actually a ridiculous clause to have in there. That said, how do you make it work for the benefit of those involved?”

Unexpectedly, Ròya’s Azad breaks from the crowd and suggests that such a clause can be acceptable, but it comes down to how it is worded in the contract. Even if enforcement is necessary, careful use of diplomacy can stave off a confrontation in most cases.

“It depends how the clause is worded — to say no interference in day-to-day operations is fair because there can only be one captain of the ship. The owner’s interference should be through certain channels through which they can communicate and get involved. They should not walk into the lobby and say they don’t like this or that, directly communicating with the members of staff,” she explained.

“If the owner is still getting involved, despite what you’re writing in the contract, then owners can point to the protections built into the contract, claiming they are not able to operate.

Operators can make a big issue and say they do not wish to run that hotel, but mostly, before things reach that state, there is a conversation between hotels and operators at different levels.

If the owner is interacting with the staff, then the GM may approach the owner’s rep and have a conversation. If they can’t get along, the higher management of the operator may directly have a conversation with the owner and explain what can be done,” said Azad.

While interference can never be ruled out entirely, Laurent Chaudet, general manager of the Pullman Dubai Mall of the Emirates, believes that a healthy dose of trust can smooth over most issues. Besides, as he puts it, owners in the Middle East are generally easier to deal with than those in the East.

“Any relationship with the owners has to be built on trust and transparency. Particularly in Asia, when we have Chinese owners coming from the Guangzhou province who have never dealt with the hotel industry, it’s more complicated than dealing with [our owner] Majid Al Futtaim, for which there are pros to working with,” he said.

“As GM, we have to understand that we are not completely empowered. We always have people complaining about what we do. According to management contracts, it’s clear we have the ability to run the show. It’s up to us to deliver what people expect, because they hired a management company. As soon we demonstrate our competence, things get better,” he concluded.