Difficulties of Management Contracts

Looks like Jim Murphy of the Prem Group agrees with some of the difficulties with management contracts in Ireland. An old posting but relevant!

D4 Hotels
I was saddened to read the reports in the media over the weekend of the falling out between Developer Sean Dunne and Hotelier John Brennan. Business is tough enough without having to deal with problems under the gaze of the national media. Mr Dunne had recruited John Brennan to reopen and manage the three former Jurys Doyle Hotels in Ballsbridge. Some newspapers claimed that the split was “extremely acrimonious”.

PREM Group operate a number of Hotels under management contract and are all too aware of the challenges that such contracts can bring. It is essential that both parties fully understand the concept of a management contract from the outset. Certainly if the relationship is not managed from the outset difficulties can arise very quickly. Good communication is essential especially in the early months while both sides are getting to know each other. Once the business settles down (usually after over a year), relationships between the owners and managers become more relaxed. These relationships take a lot of time and effort from both parties, good communication is critical in developing the trust between both parties.

Whatever happened in Ballsbridge it would be great if the detail could be kept out of the media and whatever differences the parties have could be sorted behind closed doors. The problem the rest of us Hoteliers in Dublin have is that these Hotels are dumping hotel stock onto the market at very low rates. The Burlington Hotel is about to reopen in the near future and already they have stolen some Tour Group business from one of our Hotels. The problem in Dublin is that room rates have hardly grown since 2000 while costs have risen substantially over the same period. These hotels are not in the business for the long haul and they could potentially inflict serious damage on hotels in the Dublin market who are trying to meet their commitments in a market that is sluggish to say the least.


ORIGINAL http://www.premgroup.com/blog/2008/02/25/d4-hotels/