What was the amortization expense recognized by Embassy Suites By Hilton in 2024?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
$ | Net Carrying Value | 392,748 | | Contract acquisition costs | $ 287,958 | $ | (54,374) $ | | 233,584 | | | Costs to obtain contracts | 7,256 | | (2,307) | | 4,949 | | | | $ 295,214 | $ | (56,681) $ | | 238,533 | | Amortization of our franchise contracts was as follows:
| | 2024 | 2023 | 2022 | |--------
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 amortization expense recognized in 2024 was $3,751,000. This figure represents the expense recorded in the company's statement of comprehensive income and member's equity. Amortization is the process of spreading the cost of an intangible asset over its useful life. In the case of Embassy Suites By Hilton, this includes the amortization of costs related to obtaining franchise contracts.
In addition to the $3,751,000 in amortization expense, Embassy Suites By Hilton also recognized $16,053,000 as a reduction of franchise royalty fees in 2024. This relates to the amortization of contract acquisition costs. These expenses are part of the normal accounting procedures for Embassy Suites By Hilton, reflecting the depreciation of intangible assets acquired through franchise agreements.
Prospective franchisees should understand how amortization expenses can impact the financial performance of Embassy Suites By Hilton. While these are non-cash expenses, they do affect the company's reported income and are important to consider when evaluating the overall financial health of the franchise. Understanding these accounting practices can help franchisees better interpret the financial statements provided by Embassy Suites By Hilton and assess the financial stability of the franchise system.