Originally Posted by
Flying Lawyer
This is the great thing in a management contract (from the manager's perspective). The manager takes all decisions, the owner carries all risks. The only risk IHG has to take are the costs of the GM and the risk not to make any further profit. great, ain't it?
This is the franchise business model.
The GM, appointed by the hotel company to make sure standards of the brand are met, has not the ability to make major investments without the agreement of the owner.
What brings the hotel chain: brand recognition, commercial power (which is not nothing in the hotel industry, when 40% of the guests book a luxury hotel on the official internet site).
By the way, Kempinski hotels is a strong luxury brand in Germany, and there is no reason to believe that the company will run badly the property.