What was the amount of franchise contract acquisition costs, net of refunds, for Embassy Suites in 2022?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
including the activity during the years ended December 31, 2024, 2023 and 2022, see Note 8: Related Party Transactions.
See notes to financial statements.
Hilton Franchise Holding LLC Statements of Cash Flows (in thousands)
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||
| Operating Activities: | ||||||
| Net income | $ | 1,487,571 | $ | 1,372,281 | $ | 1,233,442 |
| Adjustments to reconcile net income to net cash provided by operating | ||||||
| activities: | ||||||
| Amortization of contract acquisition costs | 16,053 | 12,897 | 11,972 | |||
| Amortization expense | 3,751 | 414 | 410 | |||
| Franchise contract acquisition costs, net of refunds | (81,063) | (37,185) | (41,991) | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | (7,971) | (5,787) | (8,139) | |||
| Other receivables due from Hilton affiliates | 64,535 | 30,383 | 335,087 | |||
| Other current assets | (2,269) | (54) | (23) | |||
| Other current liabilities | 5 | 10 | (1,542) | |||
| Change in other non-current assets | (7) | 85 | (3) | |||
| Change in deferred revenues | 34,651 | 46,130 | 42,148 | |||
| Change in other long-term liabilities | (5,568) | 5,405 | (62) | |||
| Decrease (increase) in due from Hilton affiliates related to franchise | 387 | (73) | 2,707 | |||
| deposits | ||||||
| Increase (decrease) in franchise deposits | (387) | 73 | (2,707) | |||
| Change in current intercompany payables | 4,690 | — | — | |||
| Other | 2,382 | (1,470) | (1,412) | |||
| Net cash provided by operating activities | 1,516,760 | 1,423,109 | 1,569,887 | |||
| Investing Activities: | ||||||
| Acquisition of franchise contract intangible assets | (85,304) | — | — | |||
| Payments received on financing receivables | 5,254 | — | — | |||
| Net cash used in investing activities | (80,050) | — | — | |||
| Financing Activities: | ||||||
| Issuance of short-term note | 85,304 | — | — | |||
| Distribution of retained earnings to Hilton affiliates | (1,500,000) | (1,400,000) | (1,550,000) | |||
| Increase in due from Hilton affiliates | (27,048) | (17,891) | (19,964) | |||
| Net cash used in financing activities | (1,441,744) | (1,417,891) | (1,569, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, the franchise contract acquisition costs, net of refunds, for the year ending December 31, 2022, was $(41,991). This figure represents the net cash flow related to acquiring franchise contracts, taking into account any refunds received during that period. The negative value indicates that Embassy Suites spent $41,991 more on acquiring franchise contracts than it received in refunds.
For a prospective Embassy Suites franchisee, this information provides insight into the company's investment in expanding its franchise network. Franchise contract acquisition costs are a normal part of business operations for a franchisor. Monitoring these costs and their impact on the franchisor's financial statements can be useful for potential franchisees.
It is important to note that these costs are specific to Embassy Suites and may not be directly comparable to other hotel franchises. Factors such as the brand's growth strategy, the terms of its franchise agreements, and overall market conditions can influence these figures. Reviewing these costs over several years, as presented in the table, provides a more comprehensive understanding of Embassy Suites' financial management and growth trajectory.