What costs does Bw Premier Collection capitalize related to improvements?

According to Bw Premier Collection's 2025 Franchise Disclosure Document, costs of improvements that extend the economic life or improve service potential of property, equipment, computer software, and hotel investments are capitalized. This means that instead of expensing these costs immediately, Bw Premier Collection records them as assets on its balance sheet. These assets are then depreciated over their estimated useful lives, ranging from 3 to 39 years for land improvements, buildings, and furniture and equipment, using straight-line and accelerated methods. Leasehold improvements are amortized over the shorter of the lease term or the asset's useful life.

For a prospective Bw Premier Collection franchisee, this accounting practice means that initial investments in improving a hotel property can be treated as long-term assets rather than immediate expenses, which can impact the franchisee's financial statements and tax obligations. Capitalizing these costs allows the franchisee to spread the expense over the useful life of the improvement, potentially reducing the immediate financial burden.

Additionally, purchased software license fees, related implementation costs, and costs to develop software for internal use are also capitalized and amortized on a straight-line basis over a three-year useful life. However, routine repair and maintenance costs are expensed as incurred, meaning they are recognized immediately as expenses in the period they occur. Understanding these distinctions is crucial for franchisees to properly manage their finances and ensure accurate financial reporting.