It depends on the agreement, and it should be in writing. In practice, the healthiest setup is for the owner to set the limits (minimum rate, policies and brand standard) and for the operator to decide day-to-day prices within those limits. That way the owner keeps control of what matters and the operator can react to demand at the speed the market demands.
What the owner decides
The owner bears the business risk, so they define the framework. That includes the minimum each night must earn for the hotel not to lose money, which cancellation policy is offered, which discounts are allowed and what quality level the hotel wants to position at. They also decide whether there are types of guest or groups they do not want to accept.
- The minimum rate by room type.
- Cancellation and deposit policies.
- Limits on discounts, promotions and deals with companies or groups.
- Positioning: which audience the hotel speaks to.
- Channels where they do not want to be.
What the operator decides
The operator handles the daily movement: watching demand, events and competitors, and raising or lowering the rate based on what they see. It is constant review work that a busy owner can rarely do. They also manage distribution across channels, keep the calendars current and adjust minimum stays.
For this to work, the operator needs freedom to act without asking permission for every change. If every adjustment needs an approval, the price arrives late and the demand has already passed.
An example of how decisions can be split
Imagine a small hotel. The owner sets that no room sells below a certain rate and that promotions cannot go past a certain limit. Within that framework, the operator raises rates when there is an event in the city, lowers them in a slow week to fill rooms and changes the minimum stay according to demand. The owner gets a weekly report and, each quarter, they review together whether the framework is still the right one.
The example is illustrative, but it shows the principle: the owner decides the limits and the operator decides within them.
Where conflicts appear
They almost always come from different expectations. The owner wants to protect the hotel's image and keep rates high. The operator, if paid on revenue, may lean toward filling more rooms even at lower prices. Neither position is wrong, but it has to be discussed before starting.
Another common conflict is last-minute promotions. A discount that fills an empty night can be good business, but if it becomes a habit, it trains the guest to wait.
How to put it in writing
- Define the minimum rate and the allowed exceptions.
- Clarify which changes the operator can make without consulting you and which not.
- Agree how often and in what format you review results together.
- Decide how performance is measured: revenue, occupancy, average rate and direct bookings.
- Establish who answers the guest when there is a complaint about price.
- State how these agreements are changed.
How to tell whether the split works
Check whether prices move with demand and whether decisions can be explained. Ask the operator to show you why a date has the price it has. If they cannot justify it with demand, event or competitor data, there is no strategy behind it. If you, as owner, keep changing prices on your own, the agreement is also worth reviewing.
What to do if you disagree with a decision
Talk with data. Ask the operator for the reason behind the price and compare it with what you see in the market. If there is a difference in judgment, adjust the framework going forward instead of undoing each decision. Correcting every price by hand ends up cancelling the value of having delegated.
One last point: review the agreement from time to time. The hotel changes, the market changes and what worked a year ago can fall short. Schedule a periodic conversation to go over the limits, the results and the goals, and adjust what is needed without waiting for a problem.
A good split is simple to describe: the owner sets the framework and the operator makes daily decisions within it, with clear reports that let the framework be adjusted when needed.
