What is the Royalty Fee based on for a Caption By Hyatt hotel?

According to the 2025 FDD, Caption By Hyatt franchisees must pay a royalty fee of 5% of Gross Rooms Revenue accrued during the previous month. Gross Rooms Revenue is a standard metric in the hotel industry, generally including all revenue from room rentals before deductions for things like complimentary services or discounts.

For a prospective Caption By Hyatt franchisee, this means that 5% of all revenue generated from room rentals goes to the franchisor, Hyatt. This fee is ongoing and is a significant factor in the hotel's operating expenses. The FDD also notes a potential reduction in the royalty fee for the first 1-3 years of operation if the franchisee is constructing a new hotel, which could provide some financial relief during the initial ramp-up period.

It is important to note that the royalty fee is based on Gross Rooms Revenue, not net profit, so it must be paid regardless of the hotel's profitability. Franchisees should carefully consider this when projecting their potential earnings and ensure they have sufficient cash flow to cover this expense. Understanding the nuances of what constitutes Gross Rooms Revenue, as defined in the Franchise Agreement, is also crucial for accurate financial planning.