Ahhhh, Ed Ryan. Hello.

And so it also is no surprise that the General Counsel of Marriott Internaitonal should leave such a comment here.

We think that each owner of a hotel is fully capable of making their own determination of whether discussions with their operators are fruitful, and whether breaches of contract by their operator require litigation when the operator refuses to comply with its lawful obligations.

Would you like to mention a few cases where Marriott and other operator have been in this situation, and found the only recourse was to enforce their legal rights? And wnat makes you think that any "legal recourse" is less honorable than being bound by a bad management agreement with an operator who has no conscience and will not be responsive to owner's needs?

Jim Butler, Hotel Lawyer
jbutler@jmbm.com

Jim: I could take issue with any number of the misleading rhetorical flourishes in your article ("all of the benefits of ownership and none of the burdens" -- please), but I'll stick to one fundamental issue which you gloss over. The 'long term, (so-called) no cut contracts', which you seem to imply are some Act of God, like a tornado or hurricane, are the result of hundreds of hours of negotiation between sophisticated owners and brand managers, along with all of the lawyers and advisors that that implies. The managers want the hotel to add to their systems and reflect well on their brands; the owners want the brand to help finance the hotel, professionally manage the hotel, and fill the hotel through their sales and marketing channels and loyalty programs. (Alternatively, these contracts are assumed by new owners who are fully aware of the terms, and again well advised in the acquisition of a very expensive asset.). Both sides clearly understand what they are signing up for and getting into, and to somehow condone a case of buyers’ remorse as a justifiable business objective is something that Contacts 101 taught us does not and should not hold water.

Aside from your constructive suggestion that a negotiated solution to a broken business relationship can sometimes be a productive approach, the idea that owners should resort to litigation as the means to "break" their agreement is ill-founded and ill-advised. What it leads to, and has led to in the vast majority of these cases, is spurious, nonsensical, and illusory allegations that, after millions of dollars have been spent on attorneys and discovery costs, are exposed for what they are. It is a backhanded attempt to challenge the fundamental principle of contractual integrity; it is no place for well-advised clients to go and it is a battle that the brand managers will fight with passion and unbridled resolve to protect the integrity of their written agreements.

As with any long-term business relationship, the management of a hotel will have its ups and downs. I would suggest that the more fruitful avenue is for the manager and owner to sit down and discuss the issues with the objective of reaching a mutually satisfactory conclusion. Given all of the variables that are contained in a management agreement, the brute force approach of litigation to try to 'break' a management agreement is simply inartful, if not unprincipled and expensive. The approach of negotiation has proven effective over the course of several decades of experience, even during difficult economic times, and far less costly than misguided attempts to simply tear up the contract.