A proportion of our hotels are operated under management contracts.
Park Avenue manages the hotel but ownership of the physical building remains with a third-party owner. Typically, the senior management like the General Manager and the Financial Controller are Park Avenue employees with the third-party owner employing all other staff. A management contract allows us more control over the application of quality and service standards.

There is no standard management contract; terms are agreed through negotiation with owners as the hotels involving management contracts tend to be more complex.
A management contract is made up of two separate fees: base and incentive.

The base fee is a percentage of the hotels total revenue paid to cover management costs. A typical contract would percentage of total revenue as the base fee. However, this can vary by country and brand.

The incentive fee is a share of profits. A sample contract would a percentage of gross operating profit or other agreed measure of profit as the incentive fee, although the mechanics vary considerably. This is in place to align the interests of Park Avenue with the owner of the property and rewards us for running the hotel profitably.