What was the acquisition of franchise contract intangible assets for Embassy Suites By Hilton in 2024?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
equity, 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)
2024 2023 2022 Operating Activities: Net income $ 1,487,571 $ 1,372,281 $ Adjustments to reconcile net income to net cash provided by operating activities: Amortization of contract acquisition costs 16,053 12,897 Amortization expense 3,751 414 Franchise contract acquisition costs, net of refunds (81,063) (37,185) Changes in operating assets and liabilities: Accounts receivable, net (7,971) (5,787) Other receivables due from Hilton affiliates 64,535 30,383 Other current assets (2,269) (54) Other current liabilities 5 10 Change in other non-current assets (7) 85 Change in deferred revenues 34,651 46,130 Change in other long-term liabilities (5,568) 5,405 Decrease (increase) in due from Hilton affiliates related to franchise deposits 387 (73) 2,707 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) (1,569,964) Effect of ex
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, the company acquired franchise contract intangible assets for $85.304 million in 2024. This acquisition was part of a larger transaction involving the Graduate brand. The payment for these intangible assets was made by an affiliate, resulting in a short-term note payable that was settled in February 2024, including accrued interest.
These franchise contract intangible assets are amortized over an estimated useful life of 15 years, with the amortization expense recognized in the company's statements of comprehensive income and member's equity. The activity related to the Graduate franchise contracts was included in the financial statements from the acquisition date to December 31, 2024, but it did not have a material impact on the operating results for that year.
For a prospective Embassy Suites By Hilton franchisee, this indicates the scale of investments the company makes in acquiring and managing franchise contracts. It also highlights the inter-company financial arrangements that exist within the Hilton organization. Understanding these financial activities can provide insight into the financial health and strategic direction of Embassy Suites By Hilton.