What accounting methods are used to calculate the Monthly Fees for an Embassy Suites franchise?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalty Fees and liquidated damages, all fees are subject to change.
NOTES
- The Monthly Fees are calculated in accordance with the accounting methods of the thencurrent Uniform System of Accounts for the Lodging Industry, or as specified by us in the Manual. "Gross Rooms Revenue" means all revenues derived from the sale or rental of guest rooms (both transient and permanent) of the hotel, including revenue derived from the redemption of points or rewards under the loyalty programs in which the hotel participates, amounts attributable to breakfast (where the guest room rate includes breakfast), Mandatory Guest Fees, late cancellation fees, and guaranteed no-show revenue and credit transactions, whether or not collected, at the actual rates charged, less allowances for any guest room rebates and overcharges, and will not include taxes collected directly from patrons or guests. Group booking
rebates, if any, paid by you or on your behalf to third-party groups for group stays must be included, and not deducted from, the calculation of Gross Rooms Revenue.
"Mandatory Guest Fee" means any separate fee that a patron or guest is charged for in addition to the base room rate for a guest room, including but not limited to resort fees, facility fees, destination fees, amenity fees, urban destination fees, or any other similar fee. Mandatory Guest Fees do not include employee gratuities, state or local mandatory taxes, and other tax-like fees and assessments that are levied on a stay, as determined by us, that are passed through to a third party (such as tourism public improvement district fees, tourism or improvement assessments, and convention center fees).
"Gross Spa Revenue" means all revenue from services and retail sales of products from the eforea spa, less allowances for spa rebates and overcharges, but does not include any sales or other taxes collected directly from spa customers or any revenues from food and beverage sales of the spa.
Source: Item 6 — OTHER FEES (FDD pages 27–41)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the Monthly Fees are calculated following the accounting methods outlined in the current Uniform System of Accounts for the Lodging Industry or as specified by Embassy Suites in its Manual. The term 'Gross Rooms Revenue' is central to this calculation, encompassing all revenues from guest room rentals, including those from loyalty program redemptions, breakfast inclusions, Mandatory Guest Fees, late cancellation fees, and guaranteed no-show revenue. These revenues are considered whether or not they have been collected, and are based on the actual rates charged, less any guest room rebates or overcharges.
Specifically excluded from Gross Rooms Revenue are taxes collected directly from patrons or guests. However, group booking rebates paid by the franchisee or on their behalf to third-party groups for group stays must be included in the Gross Rooms Revenue calculation. 'Mandatory Guest Fee' is defined as any separate fee charged to a guest in addition to the base room rate, such as resort fees, facility fees, or amenity fees, but does not include employee gratuities, mandatory state or local taxes, or other tax-like fees passed through to a third party.
In addition to Gross Rooms Revenue, 'Gross Spa Revenue' is also considered, which includes all revenue from spa services and retail sales, less any spa rebates or overcharges. Similar to Gross Rooms Revenue, Gross Spa Revenue does not include any sales or other taxes collected directly from spa customers or any revenues from food and beverage sales of the spa. These definitions and accounting methods ensure a standardized approach to calculating the revenues upon which the Monthly Fees are based, providing clarity and consistency for both Embassy Suites and its franchisees.