What should you inspect under each criterion?

1. Can the proposal reconcile RevPAR to distributable owner cash?

Demand a bridge that ends below operating profit. RevPAR measures room revenue per available room; GOPPAR measures gross operating profit per available room. Neither is the same as cash distributable to investors. CoStar’s reporting definitions distinguish these measures, and the OCC separately distinguishes underwriting income from cash-flow analysis. (costar.com)

For the scorecard, require this explicit reconciliation:

1. Rooms revenue plus food, beverage and other operating revenue.
2. Less departmental costs and undistributed operating expenses.
3. Equals mapped gross operating profit.
4. Less management, brand, central-service and other charges not already deducted.
5. Less property taxes, insurance, ground rent and owner-level expenses not already deducted.
6. Equals a clearly named owner operating-earnings measure before financing and capital funding.
7. Less debt interest and scheduled principal.
8. Less required reserve deposits and capital expenditure funded outside those reserves.
9. Less increases in working capital and other required cash retention.
10. Equals cash potentially available for distribution, before investor-level income taxes and subject to contractual restrictions.

Require a reserve roll-forward: opening reserve + deposits − withdrawals = closing reserve. Do not deduct both a reserve-funded expenditure and its funding deposit from unrestricted owner cash without crediting the corresponding reserve withdrawal.

Evidence request: monthly accounts, general ledger mapping, property-management-system revenue reconciliation, fee invoices, reserve activity and a schedule of normalization adjustments. Separate genuine nonrecurring items from ordinary costs relabeled as exceptional.

2. Are the boutique hotel comparables economically relevant?

Approve the competitive-set logic before accepting the forecast premium. CoStar applies sufficiency and independence rules to competitive sets; satisfying those reporting rules is not, by itself, proof that the selected hotels support this property’s positioning. (costar.com)

Require a comparison matrix covering:

• Micro-location and access to actual demand generators.
• Room count, room size and room-type mix.
• Service level, restaurant, spa and event-space complexity.
• Independent, membership or franchise positioning.
• Renovation condition and opening or stabilization stage.
• Weekday/weekend demand and monthly seasonality.
• Guest segments and distribution mix, where legitimately available.
• Performance observation period and authorized data source.

Treat publicly advertised rates as shopping evidence, not achieved ADR. Require separate documentation for achieved occupancy, ADR and RevPAR, including exclusions, closures and reporting periods.

Ask: “What evidence would cause you to reduce the proposed ADR premium?” A strong answer identifies a measurable condition. A weak answer repeats the design concept.

Where licensed performance data are unavailable, retain the comp-set fit assessment but mark the rate and occupancy conclusions as unverified. Do not manufacture a US boutique hotel RevPAR benchmark from unrelated hotel categories.

3. What is the complete cost of the management proposal?

Price the agreement, not the sales slide. A historical SEC-filed owner disclosure illustrates why fee order matters: Service Properties Trust described base fees, incentive fees subordinated to owner-priority payments, reserve requirements and separate owner funding obligations. That filing is an example of contract structure, not a current boutique fee benchmark. (sec.gov)

Request a schedule with one row per charge:

Include central accounting, revenue management, recruitment, purchasing, technology, travel, training, pre-opening and transition charges where applicable. Ask who retains procurement rebates and whether related-party services can be competitively challenged.

Run two separate comparisons:

• Common-case economics: identical operating assumptions, each bidder’s actual proposed fees.
• Supplier-specific operating case: each bidder’s incremental claims, with the evidence and additional costs needed to deliver them.

Do not permit a more optimistic revenue forecast to conceal a more expensive agreement.

4. Can the hotel actually deliver the proposed service at the budgeted labor cost?

Translate the guest promise into shifts, hours and loaded costs. Federal hotel employment guidance addresses minimum-wage, overtime and recordkeeping responsibilities, and DOL notes that employers must also account for applicable state protections. Use property-specific employment advice rather than a national wage assumption. (dol.gov) Require a monthly staffing model by department, including:

• General manager and department leadership coverage.
• Front-desk and overnight coverage.
• Housekeeping workload by occupied room and departure pattern.
• Food-and-beverage outlet hours, covers and staffing.
• Payroll taxes, benefits, overtime, recruiting and training.
• Seasonal accommodation or transportation where needed.
• Agency labor and emergency coverage assumptions.

Ask whether shared regional support is genuinely included in the fee or charged again. Test the practical workload of the proposed regional leader across assigned hotels.

A recent recruiting brief reinforces the relevance of these skills: Gecko Hospitality’s October 10, 2026 posting for a seasonal boutique-hotel leadership assignment calls for monthly owner reporting covering labor hours and channel costs alongside revenue metrics. It is one hiring brief—not a salary benchmark or proof of industry-wide hiring demand. (geckohospitality.com)

5. Will distribution or soft-brand affiliation add contribution, not just bookings?

Measure the incremental cash effect against a credible independent case. Kalibri’s published methodology emphasizes acquisition costs such as commissions, loyalty-related discounts and promotional expenditure when evaluating booking contribution. Its product claims should not be treated as independently demonstrated results for the target hotel. (kalibrilabs.com)

Require channel-level analysis of realized revenue, acquisition costs, cancellation behavior and incremental servicing costs. Reconcile gross-versus-net revenue treatment and avoid subtracting commissions twice.

For independent versus soft-brand economics, use this proposed bridge:

Incremental owner cash = contribution from genuinely additional business + documented savings − added fees on existing business − additional fixed operating costs − capital and transition cash burdens.

Keep three effects separate:

1. Incrementality: demand the hotel would not otherwise receive.
2. Migration: existing guests changing booking channel.
3. Displacement: lower-contribution business replacing business the hotel could have sold differently.

For a simple break-even screen, divide the incremental annual fixed burden—including added charges on existing revenue—by the contribution margin on genuinely new revenue after all marginal fees. Evaluate upfront capital and disruption separately in the full cash-flow model.

Where the arrangement is a franchise, obtain the applicable FDD and agreements. FTC guidance explains the disclosure process and directs buyers to costs, contractual restrictions, financial-performance representations and franchisee information. Do not assume an independent membership arrangement has identical obligations or disclosure treatment. (ftc.gov)

6. Does the capital plan cover the building, the brand and the operating interruption?

Require one reconciled capital register, not three disconnected budgets. Technical diligence and brand works should be coordinated but not substituted for one another. Partner Engineering’s hospitality scope separately identifies condition assessments, PIP review, accessibility, zoning and capital-planning services. (partneresi.com)

Recommended capital-register fields:

Partner’s published construction case material describes hotel renovation problems involving underestimated permits, building-system deficiencies and missed seasonal trading. Use those examples as a reason to test the target project’s dependencies—not as a frequency estimate for boutique renovations. (partneresi.com)

Do not award full marks for a low capital budget. Award them for a complete, supportable and funded one.

7. Can the plan survive its quiet months and a combined downside?

Require monthly cash and covenant analysis, not just annual DSCR. The OCC identifies revenue seasonality and replacement needs as hotel-specific underwriting considerations, and notes that covenant DSCR definitions may differ from underwriting calculations. (occ.treas.gov)

Request 36 months of operating history where available, a monthly forecast for at least the first 24 months, and annual projections through the proposed hold or contract evaluation period. These are recommended submission requirements, not universal standards.

Test at least four cases:

Illustrative stress only: reduce ADR by 8% and occupancy from 70% to 65%. RevPAR falls approximately 14.6%, before any cost adjustment. The occupancy change is five percentage points, not a 5% relative reduction. Calibrate real stresses to the property’s history, demand concentration and financing—not to this illustration.

For an opening-cash calculation, define monthly net cash flows after scheduled obligations but before discretionary distributions. Then calculate:

Additional opening liquidity needed = max[0, minimum cash buffer − lowest projected cash balance before new funding].

Show restricted cash separately. Do not assume an FF&E reserve can fund payroll, or that a loan commitment can be drawn without satisfying its conditions.

8. Can the owner enforce the promised protection and afford to exit?

Test contract mechanics with scenarios, not a yes/no box labeled “performance test.” The City of Austin’s published hotel management agreement text illustrates the detail involved: its performance provision uses either a budget-related test or a RevPAR test over two consecutive years, with exceptions, notice requirements and cure payments. That is a specific agreement structure, not a universal market rule. (services.austintexas.gov)

Give counsel the following review questions:

• Which budgets, material contracts, capital commitments and key appointments require owner approval?
• What can the operator spend without approval, including emergencies?
• Does the performance test require failure of one measure, both measures, or another combination?
• When does testing begin, and how are closures, renovations and extraordinary events treated?
• Who controls comp-set changes and accounting definitions?
• How often can the operator cure, and what payment or other action constitutes cure?
• What happens on sale, refinancing, lender enforcement or a change in operator control?
• What termination, key-money repayment, technology and transition amounts become payable?
• Who retains access to domains, booking accounts, operating records and transferable data?

Model at least three exits: persistent underperformance, an owner sale and voluntary replacement. Include the expected notice timeline and handover cost, not just the stated termination fee.

9. Are the right people assigned, and can they take over safely?

Verify the proposed delivery team rather than the corporate portfolio. Ask for three relevant references, preferably including a seasonal property, a comparable service model and a transition or repositioning. These are proposed diligence targets, not proof that three references alone establish competence.

For each assignment, establish:

• Who actually performed the work and whether they are assigned here.
• Starting condition, owner-funded investment and management period.
• Performance relative to market movements, not just before-and-after growth.
• Budget accuracy, reporting reliability and capital-call communication.
• Why the assignment ended, where applicable.

Ask a reference: “Tell us about a missed budget and how the operator communicated and corrected it.” In a May 21, 2026 Modern Hotelier interview, asset manager Carmen Almos emphasized candid reforecasting and collaboration when performance misses expectations. That is practitioner perspective, not independently verified evidence of any operator’s results. (themodernhotelier.com)

Require a transition schedule covering staff, payroll, reservations, deposits, supplier accounts, permissions, insurance responsibilities and emergency operations. Assign an accountable person and acceptance test to each workstream.

10. Can the owner independently verify reporting, systems and compliance?

Require a sample reporting pack and a live reconciliation exercise. Recommended minimum outputs are a departmental P&L, balance sheet, cash reconciliation, fee detail, capital register, channel contribution view and rolling forecast with explanations of variances.

For guest-facing pricing, the FTC’s short-term lodging fee rule took effect on May 12, 2025. Its guidance requires upfront total-price disclosure including calculable mandatory fees, with specified exclusions such as government charges and optional services. Have the operator demonstrate compliant direct and intermediary booking displays; a policy statement alone is insufficient. (ftc.gov)

For AI-assisted underwriting or reporting, require traceable inputs, human review and independently checked calculations. NIST’s Generative AI Profile identifies both confidently false output and data-privacy risks. Do not treat an AI-generated citation, forecast or explanation as verified evidence. (nvlpubs.nist.gov)

Proposed supplier controls should include approved data use, access restrictions, retention and deletion terms, incident responsibilities, export testing and explicit restrictions on secondary use of confidential submissions. Exclude guest-level personal information from the selection exercise unless genuinely necessary and appropriately authorized.