Do you know the phrase of “Omotenashi” in Japanese? This symbolizes Japanese hospitality. If you have visited Japan and stayed at a hotel or had a nice time in a restaurant, you would have felt a difference. Meantime, if you start your hospitality business in Japan, that’s different story.
Hospitality business includes many types of businesses such as hotel, restaurant, and so forth. Those are in common in light of providing service to guests. But it’s different regarding how to earn money from those projects. Each one of those is different regarding project size. It could range from a couple of million USD project to over one hundred million USD project. Funding scheme should be different depending on the type and size of those projects.
Typical hospitality business is a hotel with restaurant. Even though there are traditional hotel properties owned and operated by the same companies in Japan, a newly developed hotel has a scheme that separate a hotel ownership from a hotel operator. The hotel owner executes Hotel Management Contract with the hotel operator to operate the hotel. In general, it stipulates formula of remuneration with Performance Test, term of the operation, how to terminate the contract, selection of General Manager of the hotel, and so on. Since it costs to re-brand the hotel so much, its term tends to be longer.
Therefore, negotiation is indispensable. Since its contract term is long, it has long-term impact. And it’s very difficult to change it after executing the contract since they don’t intend to change it during the contract term. Even if the hotel operator is suffering from difficult economic situation, they can’t change that much but just Performance Test will apply to that situation.
If you have hospitality business lawyer for your negotiation, you could empower your negotiation. Hotel Management Contract contains various articles which should be “negotiable”. Obviously, General Manager of the hotel should be a key to have successful hotel business but that’s not the only thing. You have to target types of guests, structure organizational charts, fulfill those positions, replace those if necessary to operate the hotel more smoothly. Cash flow projection will be attached to your Hotel Management Contract, but you have to follow up after commencement of operation.
The point is, it’s day-to-day business. Hotel business has various unique aspects while not all business lawyers are familiar with this kind of business.
Hattori Law has experiences to review deal with various hotel projects ranging from tens of millions USD projects to hundreds of millions USD project from the beginning to the completion of the project. We are proficient to anticipate upcoming business events and provide deep legal insights toward every phases of your hospitality business.