A management contract is an arrangement under which operational
control of an enterprise is vested by contract in a separate
enterprise which performs the necessary managerial functions in
return for a fee.
• In Asia, many hotels operate under management contract
arrangements, as they can more easily obtain economies of scale, a
global reservation systems, brand recognition etc. It is not unusual
for contracts to be signed for 25 years, and having a fee as high as
3.5% of total revenues and 6- 10% of gross operating profit.
The Marriott International Corporation operates solely on
management contracts.