When does Bw Premier Collection begin depreciating the assets of a newly developed hotel?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
In December 2019 and March 2020, the Company acquired land to develop two hotels, located in Tempe, Arizona, and Denver, Colorado, respectively. Property development costs, including property construction costs, interest and other financing fees, property taxes, architectural and engineering fees, and other direct and indirect development costs, are capitalized beginning when the development activity commences and ending when all infrastructure is substantially complete and the property is available for occupancy.
The Vīb in Tempe, Arizona opened in March 2022 and the Vīb in Denver, Colorado opened in June 2022. During the month the respective hotel opened, the development in process assets were placed into service and depreciation of these assets commenced.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 FDD, Bw Premier Collection begins depreciating the assets of a newly developed hotel during the month that the hotel opens. At that time, the development in-process assets are placed into service, and depreciation commences. This is based on the company's experience with two hotels they developed.
Specifically, Bw Premier Collection acquired land in December 2019 and March 2020 to develop hotels in Tempe, Arizona, and Denver, Colorado. The company capitalized property development costs, including construction, interest, financing fees, property taxes, and architectural and engineering fees, from the start of development until the infrastructure was substantially complete and the property was ready for occupancy.
The Vīb hotel in Tempe, Arizona, opened in March 2022, and the Vīb hotel in Denver, Colorado, opened in June 2022. The FDD states that depreciation of the assets for each hotel began during the month that the respective hotel opened. This means that the costs associated with developing the hotel are spread out over the useful life of the assets, rather than being recognized as a one-time expense.