Non-Economic Hotels Clause Samples
The 'Non-Economic Hotels' clause defines and distinguishes hotels that do not fall under the 'economic' category, typically referring to properties that offer higher-end services, amenities, or pricing. In practice, this clause may specify criteria such as minimum star ratings, average daily rates, or the presence of certain facilities to classify a hotel as non-economic. Its core function is to ensure clarity in contractual obligations or restrictions that apply differently to economic versus non-economic hotels, thereby preventing misunderstandings and ensuring that the correct standards or terms are applied to the appropriate properties.
Non-Economic Hotels. If the Gross Revenues of any Hotel are insufficient to pay the Owner’s Priority for such Hotel in full during any two (2) out of four (4) consecutive Years, each of Manager and the relevant Owner shall, upon thirty (30) days notice to the other, be entitled to designate such Hotel a “Non-Economic Hotel.” Notwithstanding the foregoing, Manager and Owners shall not be entitled to designate Hotels for which the Invested Capital in the aggregate would exceed twenty percent (20%) of Aggregate Invested Capital and further provided for purposes of this Section 5.01 only, Aggregate Invested Capital shall be determined without giving effect to the termination of the Management Agreement of a Non-Economic Hotel and without reduction for proceeds from the sale, or deemed sale, of any Non-Economic Hotel. The party designating a Hotel as a Non-Economic Hotel (“Marketing Party”) shall market such Non-Economic Hotel for sale and any costs incurred by the Marketing Party or any other Person in connection with such marketing activities and the sale of such Hotel shall be paid out of the net proceeds of such sale. The relevant Owner, Landlord and Manager, as the case may be, shall cooperate with the Marketing Party in compiling any relevant information, preparing marketing materials and otherwise in connection with the sale of a Non-Economic Hotel.
Non-Economic Hotels. Either Owner or Manager shall be entitled to designate as a Non-Economic Hotel any Hotel the Gross Revenues of which, in two (2) out of any three (3) consecutive full Fiscal Years during the Term, are insufficient to pay the sum of all Operating Costs and, beginning January 1, 2014, all amounts to be funded to the Reserve Account pursuant to Section 5.2 (Reserve Account) with respect to such Hotel, provided the number of additional Hotels which may be designated as Non-Economic Hotels shall not exceed twenty five (25). Upon designation as a Non-Economic Hotel, such Hotel shall be marketed by Owner for third party sale as though it were a Designated Hotel pursuant to the processes in Sections 2.6(a) and (b) (Designated Hotels and Sale Process). If Owner receives a bona fide third party offer(s) it does not wish to accept, Owner shall retain such Non-Economic Hotel free and clear of any contractual obligations of any franchise or management agreement from Manager or its Affiliates. If Owner retains such Non-Economic Hotel, effective on the last day of the twelfth calendar month following the date such Hotel was designated as a Non-Economic Hotel, such Hotel shall be treated as having been purchased by Owner as a Retained Hotel under Section 2.6(c)(Retained Hotels) (Retained Hotels), including the same reduction in Owner’s First Priority and Owner’s Second Priority as provided in Section 2.6(c) (Retained Hotels). If Owner does not receive any offer within twelve (12) calendar months of the date such Hotel was designated a Non-Economic Hotel, it shall give notice to Manager and Manager shall have the right to purchase such Hotel at the original cost to Owner of such Hotel, by notice given to Owner within thirty (30) days after the last day of the twelfth calendar month following the date such Hotel was designated a Non-Economic Hotel. If Manager does not so elect, Owner may elect either to have such Hotel treated as having been purchased by Owner as a Retained Hotel under Section 2.6(c) (Retained Hotels), provided the reductions in Owner’s First Priority and Owner’s Second Priority shall be as provided in Section 2.6(c) (Retained Hotels), calculated based upon the original cost to Owner of such Hotel after reduction for any amounts actually expended and any costs which would reasonably have been expected to have been expended if the sale had been consummated, or to treat such Hotel as an Unsold Hotel under Section 2.6(h)(Unsold Hotels).
Non-Economic Hotels. Section 2.6(e) is amended such that an Affiliate Hotel may also be designated a Non-Economic Hotel in accordance with and subject to the terms of Section 2.6(e) of the Management Agreement no earlier than fifth anniversary of the Effective Date for such Affiliate Hotel; provided, however, if an Affiliate Hotel is designated as a Non-Economic Hotel and the compliance with the provisions of this Agreement as to a Non-Economic Hotel triggers withdrawal liability related to any multi-employer plan under any collective bargaining agreement or causes Manager to incur costs to comply with the requirements of Section 4204 of ERISA with respect thereto, then Owner shall pay for such withdrawal liability or compliance costs (or reimburse Manager for the same) and the net proceeds of such sale (or the price of the third party offer received in the context of a Retained Hotel) shall be reduced by the amount of such withdrawal liability or such compliance costs for purposes of calculating the reduction in Owner’s First Priority and Owner’s Second Priority. As clarification, except as otherwise hereinabove provided, all withdrawal liability or any compliance costs triggered under any multi-employer plan or collective bargaining agreement shall be considered Operating Costs.
Non-Economic Hotels. Manager shall be entitled to designate as a Non-Economic Hotel any Hotel for which, in each of any three (3) consecutive full Fiscal Years during the Term, the Operating Profit is less than the sum of (i) amounts to be funded to the Reserve Account pursuant to SECTION 5.2(a) on account of such Hotel, plus (ii) Owner’s Fixed Priority attributable to such Hotel pursuant to EXHIBIT C hereto; PROVIDED, HOWEVER, that the number of Hotels designated as Non-Economic Hotels under this Agreement (other than those with respect to which such designation has been withdrawn or deemed withdrawn, but including those which have been sold pursuant to this SECTION 2.7) shall not exceed three (3). If subsequent to a Hotel being designated as a Non-Economic Hotel but prior to its sale pursuant to this SECTION 2.7, the Operating Profit of such Hotel for any Fiscal Year shall exceed the sum of amounts to be funded to the Reserve Account pursuant to SECTION 5.2(a) on account of such Hotel, plus the portion of the Owner’s Fixed Priority for such Fiscal Year so attributable to such Hotel, such designation shall be deemed withdrawn; provided, however, if Manager is then negotiating a sale of such Hotel to a third party, such designation shall not be deemed withdrawn for a period of three (3) months.