Budget Reports. Operator will provide a budget before the start of Owner’s fiscal year, for each consecutive year after the Effective Date; if the effective day is on any date other that the start of the fiscal year, then the Operator will provide a budget within 60 days of the Effective Date. Operator will prepare: (a) A business plan (the “Annual Plan”) setting forth Operator’s estimates of the following fiscal year’s operations, based upon the most recent and reliable information then available taking into account the location of the Hotel and Operator’s experience in other comparable Operator Hotels and Inns. Annual Plans will be in such detail as is necessary for Owner to effectively review the Annual Plan. Operator may update and revise any Annual Plan from time to time to reflect variables and events not reasonably foreseeable by or within the control of Operator at the time of preparation of the Annual Plan. Operator does not guarantee the performance of the Hotel. (b) A budget estimating income and expense and cash flow, in reasonable detail, for the following Operating Year (the “Budget”), including among other things (i) a schedule of Hotel room rentals (and cabana rental, if applicable), (ii) occupancy levels and average room rate, (iii) complimentary accommodations and services, (iv) categories of income, (v) operating expenses, detailed by type, and (vi) anticipated cash flow available for distribution to Owner’ Depository Account. The Budget will be subject to the approval of Owner and, if applicable or requested, Mortgagee(s). Owner shall be responsible to obtain Mortgagee approval of the Budget, if required. Owner shall approve reasonable expenses in the Budget for the cost of employing the Executive Staff. Operator shall make the information utilized in preparing the Budget available to Owner upon Owner’s request. In the event of a disagreement with regard to a proposed Budget, and pending settlement thereof, Operator may continue to operate the Hotel in accordance with the standards herein set forth at levels of expenditure not exceeding those of the preceding year. Operator may make such expenditures from General Account as Operator deems necessary for such continued operations.
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Budget Reports. Operator will provide a budget before the start of Owner’s fiscal year, for each consecutive year after the Effective Date; if the effective day is on any date other that the start of the fiscal year, then the Operator will provide a budget within 60 days of the Effective Date. Operator will prepare: :
(a) A business plan (the “Annual Plan”) setting forth Operator’s estimates of the following fiscal year’s operations, based upon the most recent and reliable information then available taking into account the location of the Hotel and Operator’s experience in other comparable Operator Hotels and Inns. Annual Plans will be in such detail as is necessary for Owner to effectively review the Annual Plan. Operator may update and revise any Annual Plan from time to time to reflect variables and events not reasonably foreseeable by or within the control of Operator at the time of preparation of the Annual Plan. Operator does not guarantee the performance of the Hotel. .
(b) A budget estimating income and expense and cash flow, in reasonable detail, for the following Operating Year (the “Budget”), including among other things (i) a schedule of Hotel room rentals (and cabana rental, if applicable), (ii) occupancy levels and average room rate, (iii) complimentary accommodations and services, (iv) categories of income, (v) operating expenses, detailed by type, and (vi) anticipated cash flow available for distribution to Owner’ Depository Account. The Budget will be subject to the approval of Owner and, if applicable or requested, Mortgagee(s). Owner shall be responsible to obtain Mortgagee approval of the Budget, if required. Owner shall approve reasonable expenses in the Budget for the cost of employing the Executive Staff. Operator shall make the information utilized in preparing the Budget available to Owner upon Owner’s request. In the event of a disagreement with regard to a proposed Budget, and pending settlement thereof, Operator may continue to operate the Hotel in accordance with the standards herein set forth at levels of expenditure not exceeding those of the preceding year. Operator may make such expenditures from General Account as Operator deems necessary for such continued operations.
(c) If requested by Owner, Operator shall prepare the Budget to estimate the ensuing year expenditures for (i) repairs and maintenance, (ii) the purchase of Furnishings and Operating Equipment, (iii) Capital Improvements, and (iv) separate advertising, business promotion and personnel programs of the Hotels (as distinct from the programs included in Group Services).
(d) If requested by Owner, but not more often than quarterly, a narrative overview of all revenue and expense levels in the Budget and an analysis of the year over year actual results, with an explanation of any differences between the Budgets and the results and a reconciliation thereof.
(e) Operator shall comply with the applicable Budgets in all material respects unless modified verbally or in writing by Owner and Operator. Operator shall be entitled to make additional expenditures not included in a Budget in case of emergencies arising out of fire or any other casualty or other unforeseen circumstance or in order to comply with any applicable Legal or Insurance Requirements.
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