A base management fee is only one component of the owner’s cost. Compare base fees, incentives, central services, reimbursements, transition costs and contractual obligations on the same operating assumptions.
HVS’s April 25, 2024 discussion described typical base management fees of 2%–4% of total operating revenue, with 3% most common in that discussion. This is dated reference material—not a verified 2026 quote for a small boutique hotel—and incentives sit on top. (publications.hvs.com)
Our recommended fee worksheet asks:
- Which revenue categories enter the fee base?
- Is there a minimum fee or annual escalation?
- How is incentive profit defined, and what owner priority applies?
- Which services are included versus separately charged?
- Are purchasing rebates retained, shared or credited?
- What remains payable during closure, sale or termination?
Hypothetical illustration: 3% of $6 million is $180,000. A 2.5% proposal costs $150,000 before other charges; adding $75,000 of separate services brings it to $225,000 before any incentive.
That does not prove the second operator is worse. It proves that comparing only 3% with 2.5% does not answer the owner’s question.