What is Level 1 Valuation based on for Embassy Suites By Hilton?

According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, Level 1 Valuation is based on quoted prices, without adjustments, for identical assets or liabilities actively traded in the market. This valuation method relies on the most transparent and readily available data, reflecting real-time market values for the exact items being assessed.

For a prospective Embassy Suites By Hilton franchisee, understanding this valuation hierarchy is crucial for interpreting the financial statements provided in the FDD. Level 1 valuations are the most reliable because they are based on actual market transactions. This contrasts with Level 2 and Level 3 valuations, which depend on more subjective inputs and assumptions.

The FDD uses this hierarchy to classify fair value measurements, ensuring transparency in how assets and liabilities are valued. This is particularly important when assessing the financial health and stability of Hilton Franchise Holding LLC, the entity offering the Embassy Suites By Hilton franchise. Franchisees should be aware that the classification of assets and liabilities within this hierarchy is based on the lowest level of input that is significant to the fair value measurement, and this classification is reviewed each reporting period.

While Level 1 valuations provide the most straightforward assessment, it's important to recognize that not all assets or liabilities may have readily available quoted prices in active markets. In such cases, Embassy Suites By Hilton would use Level 2 or Level 3 valuations, which require more judgment and estimation. Franchisees should consider the potential impact of these different valuation methods when evaluating the financial statements and assessing the overall risk and opportunity associated with the franchise.