What was the change in deferred revenues for Embassy Suites in 2023?
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 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the change in deferred revenues in 2023 was $46,130. This figure is part of the adjustments used to reconcile net income to net cash provided by operating activities. Deferred revenue typically represents payments received for services or goods that have not yet been delivered or earned.
For a prospective Embassy Suites franchisee, understanding deferred revenue is crucial because it reflects future obligations. An increase in deferred revenue, as seen in 2023, suggests that Embassy Suites has collected more payments for future services. This could be a positive indicator of future business but also represents a liability until the services are rendered.
In the context of a franchise, deferred revenues might include initial franchise fees or ongoing royalty payments received before the franchisee has fully benefited from the associated services or support. Monitoring changes in deferred revenue can provide insights into the financial health and future obligations of Embassy Suites, which can be a valuable consideration for potential franchisees.