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The tourism industry in Kashmir is booming, attracting major hotel franchises and brand owners to this “paradise on earth”. As the sector contributes significantly to the region’s GDP, local hotel and land owners must navigate complex legal agreements to protect their interests. This comprehensive guide examines various types of hotel agreements, including franchise, management, and lease contracts, providing crucial insights for business owners in Kashmir’s hospitality sector.

To read more about this topic, check our article on Rising Kashmir at the following link: Kashmir Hospitality: A Businessman’s GUIDE to Hotel Agreements – Rising Kashmir

Here are some key highlights from the article:

  1. Tourism accounts for 7-8% of Kashmir’s GDP, generating over INR 8000 crores in annual revenue.
  2. Types of agreements covered: Franchise, Third-Party Operation/Management, Hotel Management, Lease, and Joint Development Agreements.
  3. Franchise fees typically include initial fees, royalty fees (3-5% of room revenues), and marketing fees (1-2% of total revenue).
  4. Third-party management fees usually range from 4-6% of total revenues.
  5. Hotel Management Agreements often include base fees (2-4% of gross revenue) and incentive fees (4-8% of Gross Operating Profit).
  6. Performance tests in management agreements allow owners to terminate contracts if operators underperform.
  7. Lease agreements offer stable income for owners but less control over operations.
  8. Joint Development Agreements (JDAs) allow landowners to partner with developers to construct hotels without significant financial investment.
  9. Local hotel owners in Kashmir have leverage in negotiations due to high demand for hospitality services.
  10. The article emphasizes the importance of thorough investigation, evaluation, and negotiation of legal agreements in the evolving hospitality industry.


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