Hotel Management Agreements in Spain: Legal Nature and Applicable Law

A hotel management agreement is one of the most significant contractual structures in today’s hospitality industry, particularly in mature and highly professionalised markets such as Spain. Under this arrangement, the hotel owner entrusts the operation and day-to-day management of the hotel to a specialised hotel operator, often linked to a well-known international brand, without transferring ownership of the asset.

Despite its widespread use, the hotel management agreement is not expressly regulated under Spanish law. This absence of specific legislation raises important interpretative issues regarding both its legal nature and the rules governing the contractual relationship. Understanding these foundational aspects is crucial before exploring the contract’s core features. As a result, careful contractual drafting is essential to ensure legal certainty.

Commercial nature and atypical character of hotel management agreements

From a legal perspective, a hotel management agreement is a commercial, consensual, bilateral and onerous contract, concluded within the framework of an organised business activity. Its commercial nature derives from both the entrepreneurial status of the parties and the contractual purpose itself: the professional operation of a hotel for profit, as defined in Article 2 of the Spanish Commercial Code.

However, it is an atypical contract, as it is not expressly classified or regulated by Spanish legislation. A hotel management agreement does not fully fit into traditional contractual categories, such as service agreements, agency, mandate or concession, although it may share features with each of them.

This atypical nature requires reliance on the principle of freedom of contract set out in Article 1255 of the Spanish Civil Code (which allows parties to freely determine contractual content within the limits of law, morality and public order). With an understanding of these characteristics, it is beneficial to examine the key elements that define hotel management agreements in practice.

Essential elements of a hotel management agreement

Under a hotel management agreement, the operator assumes responsibility for the overall management and daily operation of the hotel on behalf of the owner. Typical functions include:

• Staff management and supervision
• Marketing and sales strategy
• Pricing and revenue management
• Brand standards and quality control
• Operational and administrative management

The owner retains ownership of the hotel property and the hotel business, bears the economic risk of the operation, and remunerates the operator through a combination of fixed and variable fees, usually linked to revenues or operating results.

A defining feature of hotel management agreements is the absence of business risk transfer to the operator, unlike hotel or business leases. The operator acts in the name and on behalf of the owner, albeit with a high degree of operational autonomy.

Legal framework applicable to hotel management agreements in Spain

In the absence of specific regulations, the legal regime governing hotel management agreements in Spain is based on several sources of law.

Freedom of contract

The contractual provisions agreed by the parties constitute the primary governing rules of the relationship (Article 1255 of the Spanish Civil Code).

Spanish Civil Code

The general rules on obligations and contracts apply on a supplementary basis (Articles 1088 et seq. of the Spanish Civil Code), particularly regarding interpretation, performance, breach, and termination.

Spanish Commercial Code

Given its commercial nature, the Commercial Code applies in matters such as the standard of care of entrepreneurs, liability, and commercial customs (Articles 2, 50 et seq.).

Competition law

Spanish Competition Act 15/2007 and EU competition rules may apply where certain clauses (exclusivity, non-compete obligations or excessive duration) have market effects.

Unfair competition law

The Spanish Unfair Competition Act 3/1991 may become relevant where the operator’s conduct infringes principles of good faith.

Regional tourism regulations

Although regional tourism laws do not regulate the contractual relationship between the owner and the operator, they directly affect contract performance by imposing administrative, technical, and quality requirements on hotel establishments.

Key issues and legal risks in practice

Practical experience highlights several particularly sensitive aspects of hotel management agreements, including:

• Long contractual duration
• Owner’s control and monitoring mechanisms
• Early termination rights
• Compensation and indemnity regimes

Spanish case law, although limited, assesses these agreements based on their actual content and real allocation of functions and risks, rather than automatically classifying them under traditional contract types.

It is also essential to define the operator’s powers to avoid confusion with agency relationships or de facto management, which may entail significant liability implications.

Conclusion

Hotel management agreements are flexible yet complex instruments, particularly suited to the highly specialised and dynamic hospitality sector. Their commercial and atypical nature requires careful and technically precise drafting to define rights, obligations and risk allocation.

In the absence of specific regulations, legal certainty largely depends on the quality of the contractual structure and its alignment with the applicable civil, commercial, and sector-specific regulations in Spain.

If you are entering into a hotel management agreement in Spain or reviewing an existing one, specialised legal advice is essential. Our team assists hotel owners and operators in structuring and negotiating management agreements that protect their interests and ensure long-term legal certainty.