Keywords: termination, management agreements, hotel owners, takeovers

Over the past few years, there has been an increasing number of lawsuits in the United States where hotel owners have resorted to ousting their operators in the middle of the night. Examples include the attempted midnight takeover of the Four Seasons Residence Club Aviara in 2009 and the successful midnight takeovers of the Waikiki Edition and the Fairmont Turnberry Resort in 2011. The owner attempted to oust their operator without notice, relying on their common law right as "principal" to revoke the appointment of their agent (hotel operator). It is worth noting that in such cases, the owner is typically facing a potentially very substantial damages claim for wrongful termination. However, this may be scant consolation for an operator who thought that they had a robust 20-to-30-year term contract. This article explores the issue of "agency termination" in Hong Kong and other common law jurisdictions in Asia whilst briefly looking at the issue under PRC law.

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.