Development & Asset Management
Case Study Title
Aqua Boracay Owner Representation during construction, management agreement negotiation and pre-opening operations
The Client was the developer of a luxury boutique residential aparthotel situated on one of Boracay’s most pristine beachfront locales.
The Client had signed a hotel management and technical services agreement with an international hotel management and interior design company, covering its proposed 168 unit apartment resort project, under development on Boracay Island.
The apartments were being sold to individual third party owners, the majority of whom were required to place their units into an accommodation rental pool. The resort was to consist of the apartments and all the usual facilities pertaining to an international standard upscale resort hotel. Construction of the first phase of 48 apartments had reached an advanced stage of completion.
The commercial and legal advisory services which we were initially asked to provide were twofold and to run concurrently:
1 To advise on the appropriateness of the terms proposed by the Operator and assist in further negotiations with them (and also alternative operators) on the terms of an agreement to manage the property and
2 To suggest a short list of potential alternative operators, extend invitations to express their interest in managing the property, receive responses and proposals from them, to summarise their proposals, to compare the proposed agreement terms and make a recommendation of the most suitable partner.
Scope of Work
The scope was as defined above and David Williams (HSP’s Chief Operating Officer for Asia Pacific, based in Hong Kong) was appointed as the Client’s Representative in relation to the defined scope.
Subsequently, David was asked to represent the owning company and render operational, financial and supervisory advice during the pre-opening phase of development.
As completion of the project progressed, David was appointed to negotiate more favourable terms with the Operator and was heavily involved in dispute resolution and the eventual termination of the agreement.
What did Hotel Solutions Partnership achieve for the client?
In the Client’s opinion, it had inadvertently signed a management agreement which was unfavourable to the Owner. David Williams was instrumental in negotiating more balanced rights and obligations under the agreement and new terms and conditions were eventually incorporated, over an extended negotiation period.
Meanwhile, the Owner required the representative to issue a Request for Proposal to other potential Operators in case negotiations with the appointed Operator were to result in termination of the original agreement. David successfully obtained proposals and Heads of Terms from three internationally recognised hotel mamagement companies.
During the pre-opening phase of development David monitored the proposals and work of the Operator. This included advising on the critical path timeline of pre-opening activities, operations budgets, equipment acquisition, proposed post-opening operating forecasts, Sales and Marketing plans, recruitment schedules and hiring of key management positions.
Finally, David was asked to provide practical advice on the internal and legal relationships between various group entities responsible for ownership of land, bodies representing the interests of apartment owners, together with those charged with the administration of the rental pool, maintenance and financial reporting.
“David Williams, Congratulations, you are a great credit to HSP ”
Chairman, Boracay Aparthotel Resort Project