Management Contracts in the Lodging Sector: Theoretical Issues and Recent Developments

This paper aims to analyze a managerial and organizational formula, which has become widespread in the hospitality business during the past decades: the management contract (the expression "management agreement" is commonly used too). Hotel groups have proved management agreements (along with franchising) as an effective managerial tool for their growth strategies. As a consequence, currently a significant proportion of hotels is run through formulas different from traditional owning property. Hotel brands, owners and management companies have shaped permutations and combinations of operating models that, suitably employed can increase profitability (HVS, 2015). This paper provides an overview of the academic literature on the topic, starting from the first noteworthy contributions of Eyster in the 80s and 90s (Eyster, 1980, 1993), discussing the use of management contracts in the lodging sector. The review of academic contributions regarding general economy directions, theoretical frameworks and sectorial applications is integrated with the analysis of the annual reports of some leading hospitality groups and by the examination of sectorial business surveys drafted in the past decades (HVS, 2007, 2013, 2014, 2015; Jones Lang Lasalle Hotels, 2001).