12 General Terms for Hotel Management Agreement and Technical Service Agreements


1. Parties’ intentions
The owner is developing (building and equipping) an economy hotel (the “Hotel”) located in …., Ethiopia and is willing to use the Manager’s experience, services, and know-how in accordance with the applicable Brand standards.
The Manager wishes to perform this service in accordance with the applicable terms and conditions of a hotel Management Agreement and Technical Services Agreement.

2. Brand– brand type shall be identified clearly

3.Hotels Description
The Hotel would be location, plot size, number of guest rooms, double ad twin, all day dining and/or lobby bar, some meeting spaces and a minimum number car parks shall be mentioned

4. Hotel Management
Subject to the conclusion of a Hotel Management Agreement (the “HMA”) between the Parties, the Hotel shall be managed by the Operator under its Brand according to the terms and conditions set out in the HMA.

5. Hotel Design and Construction
The Hotel shall be built in compliance with the Brand standards and with local laws and regulations. For that purpose, the Parties shall enter into a Technical Services Agreement (the “TSA”) through which the Operator shall provide the Owner with its Brands standards and various Hotel Consultancy Services.

6. Development Fees
6(A). Technical assistance fee (including IT fees)
Payment schedule: —in percent
The balance in regular installments between the signing date of the                 TSA and the Opening of the hotel.

6(B). Pre-opening fee, if not waived

7.  Management Fee

7(A). Basic management fee (including Trademark fee)
a percentage of the hotel Total Gross Revenue

7(B). Incentive fee
If the GOP margin is <–%, 0% of AGOP If the GOP margin is > –%                    and < %, -% of AGOP If the GOP margin is >–% and <–%, -% of AGOP                If the GOP margin is >–% and <–%, -% of AGOP If the GOP margin is                >–% and <–%, -% of AGOP If the GOP margin is >–% and <–%, –% of               AGOP If the GOP margin is >–%, –% of AGOP

AGOP means Gross Operating Profit as per definition in Uniform                       System of Account minus Basic management fee

8. Mandatory Billable Services
Payable to the Manager such as
Marketing fee -% of the hotel total Room Revenue
Distribution & Reservation Fee

 9. Taxation and Payment
9(A). Taxation
All fees or royalties to be paid under the Agreement are quoted net of any taxes, levies, imports, duties, charges, fees or withholding taxes (including value added tax) of any nature now or hereafter imposed by any governmental, fiscal or other authority.

In addition to the net fees, the Owner shall pay to the Manager, if applicable, all value added taxes or all sums due to the Manager according to the law and at the rate in effect, other than income taxes which the Manager is liable to pay. Such additional taxes shall be added, if appropriate, to the fees invoiced by the Manager to the Owner.

If the tax treaty between the State of the Owner and the State of the Manager provides a withholding tax on certain fees paid by the Owner, which gives right to an equivalent tax credit for the Manager in its State, the Owner shall withhold at source the tax due, at the treaty rate, and provide the Manager with a tax certificate, in order for the Manager to obtain the right to use the tax credit in its State.

9(B). Payment
All payment shall be made in USD

10. Contract Term Length
10(A). Initial term — years
10(B). Renewable terms
Extended for additional – terms of – years unless either Party notifies the other Party of its decision not to renew this Agreement according to a notice period.

10(C) FF&E reserve contribution
A cash reserve shall be made for the purpose of replacing or repairing the FF&E. The Hotels’ contribution to this cash reserve shall be:
– % of the hotel total revenue in year 1;
-% of the hotel total revenue in year 2;
-% of the hotel total revenue in year 3;
-% of the hotel total revenue in year 4 and on wards.

11. Governing Law and Jurisdiction
11(A). Governing law
Ethiopian Law(For example)

11(B). Governing language

11(C). Jurisdiction
Mediation in —- under the —-Rules of —– and if no settlement is reached, Arbitration, according to —–rules.

Alternatively, federal courts of …jurisdiction.

12. Other Contract terms

12(A). Confidentiality
Each Party hereby undertakes for a period of one year from the date of the signature of this that it will keep confidential any information concerning the subject matter of this and any draft agreements mentioned herein which either Party may divulge or supply to the other and that it will use all reasonable endeavors to procure that their respective employees, agents and professional advisers observe the same obligation of confidentiality.
Such confidentiality undertaking will not apply to any information which (i) is for the time being in the public domain, (ii) is acquired through a third party on a non-confidential basis; or (iii) is required to be disclosed by law or pursuant to any requirement of any governmental, official or regulatory body.

12(B). Restricted Area
Commencing the execution of the Hotel Management Agreement till the —, Operator shall not operate another “ (the “Brand”)” within —- kilometers radius measured from the center point of the lobby desk of the Hotel.

12(C). Performance Test
After the completion of the – full year of operations: if the Operator fails to achieve for — consecutive years (i) –% of the budgeted GOP and (ii) –% of the REVPAR Index of the competitive benchmark to be defined, then (a) Owner has the right to terminate the agreement (b) Operator has a right to cure by paying the shortfall between budgeted and actual GOP

Other negotiated contract terms shall be included in the HMA and TSA.

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