MIHM304 Reflection on Hotel Management Agreement Negotiation and Contract Assessment 2 Answer
Contracts and Negotiation
The contract between a merger of Allwood hotels and Regency Group PTY Ltd was unsuccessful due to different reasons. However, the contract shows all the elements of a valid contract. An offer has been made to the Regency Group PTY Ltd. to come in terms with a pre-opening fee of $250000, 5% of gross revenue, 8% of GOP and $12000 key money for each room. The second stage is also seen by accepting the offer with some minor consideration which is the third stage of successful contract formation. The Regency group have come up with some points to consider for the Allwood Hotel as an operator. Regency Group has mentioned that they will need $250000 as redesigning charges and if Allwood is okay to provide that then no opening charges are required. However, instead of 5% of gross revenue, Regency is ready to give away only 1.5% of gross revenue as the final offer. In the same way, the termination rights, control, brand standards, restrictions and employment options are all revised and asked the Allwood to consider. Both the parties have shown an intention to legal relations through the communication and letter of intent for the contract. The terms and conditions are clearly mentioned in the letter of intent from the operator and Regent Group. Both the sides are capable of doing an agreement as they are already business intuitions which can go for a legal contract. In this context, it can be said all the 6 elements of a successful contract creation is properly visible in the exchange of emails between operator and regency group. However, the acceptance of personal offer or reconsideration of the revised terms and conditions have led to the non-completion of this contract.
I have played the role of an operator in this negotiation and contract development process. It is quite clear that I have developed some useful terms and conditions that was a win-win situation for both the sides where the Regency Group would get rebranded as Allwood Hotels whereas the company will also get benefited with opening money of $250000. The offer made was a reasonable one and negotiated properly to come in terms with the Regency Group. However, the contract was unsuccessful. This has both positive and negative experiences for me.
I have been able to develop a better understanding of the negotiation process. I have come to understand that for a contract to be successful, a couple of rounds of negotiation is necessary. A contract requires making an offer as well as reconsideration and negotiation on the terms and conditions. However, in my case, I have not gone with more than 1 round of negotiation with the Regency Group. By considering the offer of the Regency Group, I could have come up with new terms and conditions that could have helped the other side to comply with a few of the terms and conditions. I could have repeated the process a couple of times to convince the other party to come in terms which could have resulted in the success of the contract. However, as I have not followed these steps for this contract, my performance in the negotiation process is not good. In future, if a similar situation arises, I will try to focus more on negotiation either through over the mail, phone and face-to-face. Doing face-to-face communication for the negotiation process will help me to overcome the difficulties of expression that I faced in this contract where I only made use of phone and mail conversation for negotiation. I will also try to come with a win-win situation that will not harm my side as well as the other side by coming in terms of a contract.