Zeidel & Associates Structures and Negotiates Food and Beverage Management Agreement for Reimagined San Antonio River Walk Hotel

Situation

The client, a boutique investment firm, acquired a hotel on the San Antonio River Walk in 2022 and began planning a substantial renovation and rebranding of the entire property, with a targeted reopening in the fall of 2026. As part of that effort, the owner needed a food and beverage management agreement for the hotel’s restaurant, cafés, event spaces, membership club and in-room dining operations. The selected food and beverage manager was a well-regarded, prominent local operator, but had not previously managed food and beverage facilities at a hotel.

The firm was engaged to structure, draft and negotiate a food and beverage management agreement to document this relationship.

Approach

Adding a layer of complexity, the client asked the firm to use the client’s own food and beverage management agreement from another location. The available document, however, was a fully negotiated agreement, and it lacked a number of protections and provisions appropriate for the new relationship. Zeidel & Associates therefore did more than separate deal-specific provisions from concepts suitable for the new relationship; it also identified deficiencies the prior agreement did not address and developed additional owner protections.

The firm provided the client with an issues list identifying owner protections on which the prior agreement was silent or deficient and worked with the client to determine which additional provisions should be incorporated or bolstered. The firm developed a comprehensive framework covering pre-opening services, concept and menu development, staffing and training, hotel integration, budgeting, financial reporting, operating accounts, management fees, reimbursable expenses and the allocation of responsibilities among the owner, hotel manager and food and beverage manager.

After extensive delays in receiving manager comments to the firm’s initial draft of the agreement, the manager’s counsel proposed significant and often unreasonable revisions. This resulted in the client engaging directly with the manager’s principal to negotiate the remainder of the agreement, in an effort to limit the involvement of manager’s counsel.  This approach allowed the firm to retain control of the document.

In the meantime, the client publicly announced and marketed the relationship while negotiations were proceeding, adding commercial pressure to complete the agreement while the parties were still working through significant terms.

Zeidel & Associates also pursued a guaranty for the food and beverage manager’s obligations. Although the manager was hesitant, the firm ultimately secured a limited joinder from the manager’s parent company to backstop the manager’s indemnification obligations. Additionally, at a late stage in the negotiations, the owner’s preferred equity investor requested that the manager execute a subordination and consent in its favor. Zeidel & Associates expeditiously addressed the additional requirement and secured the manager’s agreement to the requested subordination and consent.

Result

The firm delivered a structure that balanced the food and beverage manager’s day-to-day operating authority with the owner’s need to maintain appropriate control over the property, brand, investment and coordination with the hotel’s broader operations.