For Bw Premier Collection's hotel investments, when does the capitalization of property development costs end?
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 Bw Premier Collection's 2025 Franchise Disclosure Document, the capitalization of property development costs for hotel investments ends when all infrastructure is substantially complete and the property is available for occupancy. This includes costs such as property construction, interest and financing fees, property taxes, and architectural and engineering fees.
For a prospective Bw Premier Collection franchisee, this means that all eligible development costs are added to the property's book value up until the point the hotel is ready to open. After this point, these costs cannot be capitalized further and will be subject to depreciation.
For example, Bw Premier Collection developed two hotels in Tempe, Arizona, and Denver, Colorado. The Vīb in Tempe opened in March 2022, and the Vīb in Denver opened in June 2022. In the months that each hotel opened, the development in process assets were placed into service, and depreciation of these assets began. This illustrates the practical application of the capitalization policy, as the moment the hotel is operational, the accumulated development costs are then depreciated over the asset's useful life.