Hotel contracts: management agreement, lease agreement and hotel franchise agreement
Hotel contracts acquire special relevance in a context in which tourism in Spain is one of the most profitable sectors with the greatest economic projection, particularly foreign tourism. According to the Ministry of Industry and Tourism, expenditure by international tourists exceeded 105 billion euros up to September 2025, 7% more than in the same period of the previous year.
This profitability is reflected in the growth of the hotel sector. According to the National Statistics Institute (INE), hotel prices rose by 5.16% in June and 4.97% in July, figures significantly higher than the CPI (2.7%), which explains the record margins and profits that leading hotel chains are achieving.
Since investing in the hotel sector may prove especially attractive, David Devesa, Partner and CEO of Devesa Abogados, has already devoted an article to defining hotel contracts and explaining the standard clauses contained in hotel management agreements. Building on that introduction, this article examines the most relevant aspects of these hotel contracts: duration, remuneration and obligations of the parties, both in the management agreement and the hotel lease agreement, as well as another key arrangement: the hotel franchise agreement.
Hotel management agreement within the framework of hotel contracts
The hotel management agreement is commercial in nature, as it is concluded between entrepreneurs, and is considered a service contract. Its complexity lies in the need to set out in detail all the obligations of both parties, given that it lacks specific regulation in Spanish law.
It is defined as the contract whereby a natural or legal person (the manager) administers, in the name and on behalf of the hotel owner (the proprietor), the operation of the establishment in exchange for remuneration, assuming operational and administrative responsibility in accordance with the terms agreed.
Duration of the hotel management agreement
The term is usually long, often for periods of 10 years, with successive extensions of one to three years.
Upon termination of such hotel contracts, it is common to agree a right of first refusal in favour of the manager should the owner wish to enter into a new management agreement or a lease agreement.
Regarding revocation:
- The manager may resign during the initial or extended term, unless otherwise agreed, pursuant to Article 1.736 of the Spanish Civil Code.
- The owner typically agrees that revocation is only permitted in the event of a sale of the hotel establishment.
Obligations of the owner
The owner’s typical obligations under these hotel contracts include:
- Making available the hotel establishment with:
- A full complement of machinery, furniture and equipment.
- Personnel necessary for its operation.
- All licences and permits required for operation.
- Insurance against serious risks (fire, flooding, earthquake, etc.).
- Granting powers of attorney to the manager for representation.
- Providing working capital to ensure hotel operations.
- Paying the manager’s remuneration, normally variable. Examples:
- 3% of gross revenue (settled monthly).
- 10% of operating profit (settled annually).
- Holding the manager harmless for losses arising from management, except in cases of negligence.
Obligations of the manager
- Managing the hotel diligently (obligation of means).
- Maintaining fidelity, loyalty, confidentiality and observing non-competition obligations.
- Holding sufficient powers to act on behalf of the owner.
- Not assigning the contract without authorisation.
- Being liable for acts of third parties if management has been delegated.
- Periodically informing the owner (monthly accounts, quarterly balance sheet, annual accounts).
- Preserving the establishment and returning it without reduction in value beyond normal wear and tear.
Hotel lease agreement within the framework of hotel contracts
Unlike the management agreement:
Unlike the management agreement, in the hotel lease, the tenant operates the hotel on its own account, assuming profits and losses.
- The contract entails the lease of the property, subject to the Urban Leases Act (LAU) in its version in force in 2025 (as amended by Act 12/2023).
Making the business available requires detailed verification of its physical, legal and administrative condition, ensuring that the tenant is fully aware of the hotel’s actual situation.
It is likewise advisable to regulate in detail the conditions for returning the business upon termination of the contract.
Duration of the hotel lease agreement
The term is usually medium or long, between 5 and 10 years, with annual extensions unless otherwise notified. It is common to:
- Include rebus sic stantibus clauses to adapt the contract to market changes.
- Establish compensation should the tenant terminate early.
Rent
Rent is typically structured as:
- Fixed monthly rent (usually per room).
- Variable rent based on annual net turnover.
Works
- The landlord bears works necessary for the preservation of the property.
- The tenant covers minor repairs arising from ordinary use.
Insurance
It is common to agree:
- Landlord → building insurance (structure and installations).
- Tenant → public liability insurance for business operation.
Expenses and taxes
It is usually agreed that:
- The landlord pays expenses linked to the property:
- Property tax (IBI)
- Structural repairs
- Replacement of elements at end of useful life
- The tenant pays operating expenses:
- Energy and utilities
- Taxes linked to the hotel activity
Hotel franchise agreement within the framework of hotel contracts
In the hotel franchise agreement:
- The franchisor grants the franchisee the right to operate a hotel using the franchisor’s hotel know-how, brand image and operational standards.
- The franchisee adapts and manages its hotel in accordance with those standards.
Unlike the management agreement:
- The franchisee is not the franchisor’s representative.
- The franchisee must inform third parties that it acts on its own behalf, especially regarding employment, tax or insurance obligations.
Franchisor’s remuneration
Depending on the terms agreed, the franchisee may pay:
- An initial franchise fee.
- Mixed remuneration (usually not exceeding 5% of gross revenue):
- Annual fixed component.
- Variable component linked to performance.
- Advertising fee, depending on campaigns and number of rooms.
Obligations of the franchisor
- Providing the operations manual, marketing and promotional materials.
- Offering technical assistance and advice.
- Delivering staff training.
- Developing the marketing plan and commercial actions and managing loyalty programmes.
Obligations of the franchisee
- Complying with the operations manual and related obligations.
- Holding the right to operate the establishment.
- Possessing valid licences and permits.
- Maintaining good reputation and solvency.
- Properly hiring and training its staff.
Hotel contracts: conclusion
As shown, there are various ways to invest in the hotel sector through commercial contracts, making it essential to regulate these agreements properly to avoid disputes and minimise risks. At Devesa Abogados, we have highly specialised professionals in contract law capable of ensuring the correct drafting, review and supervision of these hotel contracts, thereby protecting our clients’ interests.
Do you need advice? Access our areas related to hotel contracts: