In the context of Best Western's hotel investments, what costs are included in property development costs?

According to Best Western's 2025 Franchise Disclosure Document, property development costs for hotels include several components. These costs are capitalized, meaning they are added to the value of the property on the balance sheet rather than expensed immediately. Capitalization begins when development activity starts and continues until the infrastructure is substantially complete and the property is ready for occupancy.

The specific costs that Best Western includes in property development are property construction costs, interest and other financing fees, property taxes, architectural and engineering fees, and other direct and indirect development costs. This comprehensive list suggests that Best Western aims to capture all expenses related to bringing a hotel property from the initial land acquisition to an operational state.

For a prospective Best Western franchisee, understanding these capitalized costs is crucial for financial planning and project budgeting. Knowing which expenses can be included as part of the property's asset value can impact depreciation schedules and overall profitability calculations. It is important to note that the results of operations for the hotels are reported in other revenues and general and administrative expenses in the Consolidated Statements of Revenues and Expenses.