If management decides to postpone a necessary repair, the savings will save expenses, but only postpone them to a later date. If a hotel has been operated with a lower-than-normal maintenance budget, it is likely that it has accumulated a considerable amount of deferred maintenance costs. In the end, an insufficient reserve of FF-E has a negative effect on the standard or classification of a property and can also lead to a decline in hotel performance and its value. Perhaps more importantly, we found that the focus of the lens was strongly linked to the hotel`s delivery. In other words, the bigger the destination, the better the performance of the hotel. To eliminate some possible explanations for this relationship, we controlled the impact that other variables, such as GM`s experience, the presence of an asset manager and the size of the hotel, could have on its performance. We found statistical evidence that confirms that the orientation does have a positive impact on hotel performance. At the same time, operators have begun to explicitly prohibit an « agency » relationship and hence their obligations of loyalty, diligence and diligence. In this way, the operators tried to protect themselves from all accusations of « car trade », a concern for operators who wanted to buy goods and services on the basis of one arm. In addition, operators have explicitly highlighted liability limitations for owners, with the exception of ultra vires acts. Through the courts, the operators effectively converted the contractual relationship standard into the independent contractor`s standard, while creating a standard market language in which any liability and obligation of loyalty to the owners was significantly freed up.
The status of owner-operator relationship is complex in the United States and must be carefully considered in light of procedural cases and existing legislation. For example, Maryland state laws provide that in the event of a conflict between the express terms of a hotel management agreement and the statutory conditions for an agency relationship, the explicit terms of the agreement prevail; (ii) that a court may grant a specified benefit (i.e. an injunction) in the event of an early or actual infringement or an attempt or effective termination of a hotel administration agreement. An owner would be well advised not to approve Maryland law in its hotel management agreements. Agency law provides for a set of rules that allow business relationships to flourish. Without agency law, commercial relations would face problems arising from asymmetrical information that would inevitably be used to the detriment of the less competent party.