How are Embassy Suites franchise royalty fees typically calculated?

According to Embassy Suites's 2025 Franchise Disclosure Document, franchise royalty fees are generally calculated as a percentage of the hotel's monthly gross room revenue. In some instances, these fees may also include a percentage of gross food and beverage revenues, as well as other revenues, if applicable. These fees are typically billed and collected on a monthly basis, with revenue generally recognized as services are provided.

It's important to note that consideration paid to incentivize hotel owners to enter into franchise contracts with Embassy Suites is amortized over the life of the contract, potentially including extension periods at Embassy Suites's sole option. This amortization is treated as a reduction to the franchise royalty fees collected. This means that the actual royalty revenue recognized by Embassy Suites may be lower due to these incentives.

For a prospective franchisee, this means that the royalty fees paid to Embassy Suites will primarily depend on the hotel's room revenue, but could also be affected by food and beverage sales and other revenue streams. The specific percentage charged on these revenue streams would be detailed in the franchise agreement. Additionally, any incentives offered by Embassy Suites to attract the franchisee could result in a reduction of the royalty fees paid over the term of the agreement.