Hotel management agreements, like many commercial contracts, often contain clauses—commonly referred to as a “force majeure clause”—excusing the performance of the hotel operator and/or hotel owner if an event beyond its control makes performance practically impossible, impracticable, or difficult. Hospitality industry stakeholders were forced to confront these clauses during the COVID-19 pandemic, and the current conflict in the Middle East may require stakeholders to once again reexamine their rights and obligations under these provisions.
What Is a 'Force Majeure' Clause?
Courts largely permit sophisticated parties to allocate risk as they see fit. As a result, in the absence of a clause in a contract absolving a party of its obligation to perform, a party unable to fulfill its obligations due to an event outside its control faces a high bar to excuse its performance.
At common law, the two defenses often invoked are “impossibility”—excusing performance if it is “rendered impossible by intervening governmental activities”—and “frustration of purpose”—“a change in circumstance making one party’s performance virtually worthless to the other[.]”
Both common law defenses require the intervening event to be unforeseeable. See, e.g., Kay v. Heavenly Events & Catering Corp., 431 A.D.3d 1305, 1308 (2d Dep’t 2024) (internal citations and quotation marks omitted); Gulf LNG Energy, LLC v. Eni S.p.A., 232 A.D.3d 183, 192 (1st Dep’t 2024) (internal citations and quotation marks omitted).
Rather than rely on these common law doctrines, sophisticated commercial parties, such as hotel owners, operators, and franchisors, often agree in advance as to what events do (and do not) excuse certain contractual obligations.
A typical force majeure clause will delay and/or excuse performance during the existence of natural disasters, pandemics, riots, governmental restrictions, labor strikes, supply chain issues, and/or other events outside the parties’ control which prevent timely performance of contractual obligations. As relevant now, many force majeure clauses expressly include war and/or acts of terrorism.
As decisions issued in the wake of the COVID-19 pandemic reaffirmed, the language of the clause at issue is paramount as many courts, including those in New York, strictly enforce and narrowly interpret force majeure clauses (i.e., if an event is not expressly listed as a force majeure event, courts may reject efforts to portray non-specified events as excusing performance).
A force majeure clause may also specify which obligations are (and are not) excused or delayed in the event of a force majeure. For example, a force majeure clause may excuse the hotel operator from meeting specified operational standards and restrict a hotel owner’s otherwise available right to terminate a management agreement, but may clarify that the hotel owner cannot use a force majeure event as a reason to refuse to provide working capital or to pay the hotel operator.
Similarly, some hotel management agreements permit the hotel operator to exceed previously agreed spending limits so long as such increases are caused by a force majeure event. A clause becoming more common following the COVID-19 pandemic is the right of the hotel owner and/or operator to temporarily cease hotel operations in the event of a force majeure.
Is the Middle East Conflict a Force Majeure Event?
There is little doubt that the current Middle East conflict is profoundly impacting hospitality operations in the region and even throughout the world. Whether the conflict constitutes a force majeure event depends on the language of the underlying hotel management or franchise agreement (and, of course, the effect the conflict has on hotel operations).
Assuming the subject clause lists “war” as such a force majeure event, hotel owners and/or operators located in affected areas of the Middle East—many of which are experiencing COVID-19 pandemic levels of occupancy, including a mere 22.8% occupancy level in the tourist hub of Dubai, 70% year-over-year occupancy decline in Bahrain, and significant restrictions on flights entering Israel—may be able to argue that the conflict triggers the protection of a force majeure clause.
The hospitality industry—including properties outside the Middle East region—may face other material challenges due to this conflict. Despite the current ceasefire, the Strait of Hormuz, a seaway from which a significant portion of the world’s liquified natural gas and crude oil passes to reach global markets, continues to be effectively closed.
In addition to being a significant source of energy for many parts of the world, these shipments are also used to create a significant portion of the world’s plastic, rubber, chemical, and agricultural products, affecting a wide-ranging number of products, equipment, and even food supply used in daily hotel operations.
Attacks by the Houthis from Yemen in the Bab al-Mandeb Strait—on the opposite side of the Arabian Peninsula and on a necessary seaway to reach or exit the Suez Canal—may lead to a blockage of yet another critical passageway for international shipping.
As a result, energy prices have significantly increased globally and, absent a prompt resolution, significant supply chain issues for many products—both byproducts of exports from the region, as well as other products passing through—are to be expected. Notably, in March 2026, the State-owned QatarEnergy declared force majeure events under its long-term liquified natural gas contracts for up to five years.
The potential disruption to hotel operations are significant: it is possible that products required for daily operations (including those mandated by a hotel brand) will be delayed, unavailable, or exponentially more expensive; energy costs may skyrocket; and, for hotels located in the Middle East region, overall travel (and therefore occupancy) may be suppressed until there is a change of circumstances (and, as was widely reported, several luxury hotels in Dubai were targeted by Iranian drones, causing significant damage).
Whether the conflict and its effects constitute a force majeure event will likely require consideration of a host of factors, including the location of the hotel and from where its guests come (among other things), and above all depends on the language of each agreement impacted.
Stakeholder Considerations
The current conflict highlights the importance of careful drafting of hotel management and franchise agreements, including the allocation of risk in a force majeure clause. Hotel owners—who are financially responsible for costs incurred through hotel operations—are likely to face the largest burden and may insist on additional rights to minimize risk (such as clear spending limits, or the ability to temporarily cease operations if financially impracticable).
Hotel operators—who are tasked with managing hotels to a specified standard—may insist on language excusing any operational deficiencies caused due to such events. Hotel franchisors—who expect their brands to be operated to certain standards, sometimes down to the specific soap that must be used—will want to make sure their brands’ reputations are not detrimentally affected. In all events, stakeholders should endeavor to expect the unexpected and agree in advance what happens if war—or another force majeure event—affects hotel operations.
This article first appeared in the April 14, 2026, edition of the “New York Law Journal” © 2026 ALM Global Properties, LLC. All rights reserved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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