Creating Alignment with the Termination Clause

Hotel management agreements include many provisions and clauses, but which one is the most important? In this video, we interview Ken Fuller from his office in Bethesda, MD, and he explains that for his firm, LaSalle Hotel Properties, the ability to terminate the agreement at will is critical. From his perspective, instead of creating an antagonistic atmosphere, the termination clause helps to forge alignment between the owner and the hotel company, and ultimately, the shareholder.

Kenneth G. Fuller returned to LaSalle Hotel Properties in April 2016 as Executive Vice President, Chief Financial Officer, Secretary and Treasurer. Lasalle is focused on earning attractive returns through the ownership of upscale full-service hotels located in urban, resort and convention markets. Fuller previously served fifteen years with LaSalle as Treasurer, from 2011 to 2015; Vice President of Finance, from 2009 to 2011; and Vice President of Asset Management, from 2007 to 2009. In 2015, he founded Vine Investment Partners, a real estate company focused on acquiring and developing multi-family residential properties and hotels. Fuller holds a B.S. in Hotel Administration from Cornell University's School of Hotel Administration. (The job title listed above was held by our expert at the time of this interview.)

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From your perspective, what is the most important clause in the hotel management agreement (HMA)?

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Why is the ability to terminate the management agreement (contract) important to your firm?