Switching Hotel Management Companies: Owner's Guide

Signs it is time to make a change

Owners rarely switch management companies over a single bad month. The pattern is usually slower: the hotel keeps losing ground to its comp set, budgets are missed with vague explanations, labor creeps up, brand audit scores slip or the regional leader stops showing up. If you are seeing several of these at once and conversations with the operator are not changing anything, it is time to look at your options seriously and quietly. Document the issues as you go, with dates, reports and written requests, because that record helps whether you negotiate an exit or rely on a performance test.

Start with the termination clause

Your management agreement decides how, when and at what cost you can leave, so read it before you say anything to the operator. Most agreements include some mix of three exits:

• Termination without cause: you can end the agreement for any reason, usually with notice and often with a termination fee.
• Performance test: if the hotel fails defined targets, you can terminate, often without a fee. These tests often reference a RevPAR index of around 85 to 90% of the comp set and/or a share of budgeted GOP, failed in consecutive years. Many give the manager a right to cure, and some exclude years affected by market disruptions or renovations.
• Termination on sale: if you sell the hotel, the agreement may end, sometimes with a fee and sometimes only if the buyer does not assume it.

Have your attorney review the management agreement and your franchise agreement before you give notice, because the details matter more than any general guide can cover.

Notice periods, fees and what you owe on exit

Notice periods vary by agreement, but owners commonly see requirements measured in months, not weeks. Termination fees, where they apply, are often calculated from fees the manager would have earned over a period of time, and some agreements reduce the fee the longer the contract has run. Beyond the fee itself, plan for what you will owe on the way out: unpaid management and accounting fees, reimbursement of costs the manager advanced and, in some cases, payroll-related liabilities. Ask your attorney and accountant to build a single number for the true cost of leaving before you decide.

Choose your next model before you give notice

Do not send a termination letter until you know who or what comes next. Your options include hiring another third-party management company, self-managing with a strong GM, or self-managing with outside oversight such as a fractional regional director. Each choice changes who employs the staff, who holds the bank accounts and who the brand treats as the operator. Line up the replacement, agree on terms and confirm franchisor approval requirements first, so the handoff date is set on your schedule rather than the outgoing manager's.

What has to transfer

A management change touches almost every part of the hotel. Build a checklist that covers at least these areas:

• Staff and payroll: who the employer of record will be, offer letters, benefits continuity, accrued PTO and the final payroll under the old manager.
• Systems: PMS, POS, accounting, payroll, timekeeping, revenue management and email accounts, including who owns each license.
• Data: guest history, group and contract files, financial history, general ledger detail and personnel records.
• Vendor contracts: which agreements are in the hotel's name, which are under the manager's master contracts and which need to be reassigned or replaced.
• Brand notification: franchisor approval of the new operator, updates to brand systems access and any training requirements.
• Banking and licenses: operating accounts, merchant processing, liquor licenses and permits.

A 60 to 90 day transition outline

Every transition is different, but a practical sequence looks like this:

• Days 1 to 15: attorney review, cost of exit, selection of the new operator or oversight model and franchisor conversations.
• Days 15 to 30: formal notice under the agreement, a written transition plan with the outgoing manager and a request for all system, data and contract inventories.
• Days 30 to 60: staff communication and offers, new payroll and benefits setup, bank and merchant changes, vendor reassignments and brand system access for the new team.
• Days 60 to 75: data exports, opening balances, inventories and a final walkthrough of the hotel with both teams.
• Days 75 to 90: cutover, first payroll under the new structure, closing reconciliation with the old manager and a 30 day review of results.

Protect the hotel during the handoff

Guests should never notice that the operator changed. Keep your GM and key department heads informed and committed, because losing them mid-transition causes more damage than the switch itself. Watch the group pace, upcoming events and online reviews closely. Make sure guest deposits, advance payments and gift certificates are accounted for and transferred, and that no brand quality audit lands unprepared in the middle of the cutover. Hold back final payments to the outgoing manager until reconciliations are complete and data has been delivered.

Getting help with the transition

A management change is part legal, part accounting and part operations. Big Tex Hospitality runs openings, conversions and transitions scoped per project, and offers a free management agreement review so you can understand your exit options before you act.

Big Tex Hospitality Management Advisors · Updated 2026-10-17 · Reviewed by Ryan NeGron, former hotel GM and VP of Operational Management. General information, not legal or financial advice.

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• Hotel asset management vs. hotel management: what owners need to know
• Alternatives to a hotel management company for independent owners
• What a hotel management agreement really costs
• Twelve questions to ask before you sign a management agreement

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