What was the total amount of distributions of retained earnings to Hilton affiliates from Embassy Suites in 2023?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
hin twelve months from the date of the balance sheet recorded as current assets. These amounts are classified as other receivables due from Hilton affiliates. Amounts due from Hilton affiliates that are not expected to be repaid are reflected as a component of member's equity.
During the years ended December 31, 2024, 2023 and 2022, we settled $1.5 billion, $1.4 billion and $1.55 billion of other receivables due from Hilton affiliates, respectively, and simultaneously distributed $1.5 billion, $1.4 billion and $1.55 billion of our retained earnings to Parent, respec
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, the company distributed $1.4 billion of its retained earnings to Hilton affiliates in 2023. These distributions are related to the settlement of other receivables due from Hilton affiliates. These receivables arise from Hilton's centralized cash management system.
Embassy Suites's settlements of other receivables from Hilton affiliates are categorized as operating activities in the cash flow statements. Simultaneously, the distributions of retained earnings are classified as financing activities. This related-party transaction is a recurring event, as similar distributions occurred in 2022 and 2024.
For a prospective Embassy Suites franchisee, this indicates that a significant portion of the company's earnings are routinely distributed to its parent company, Hilton. While this is not inherently negative, it is essential to understand the financial relationship between Embassy Suites and Hilton and how it might affect the availability of funds for future growth, investments, or unforeseen circumstances. It also highlights the importance of Hilton's financial stability for Embassy Suites's financial health.