What is Level 3 Valuation based on for Embassy Suites By Hilton?
Embassy_Suites_By_Hilton Franchise · 2025 FDDAnswer from 2025 FDD Document
- Level 2 Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.
- Level 3 Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites By Hilton's 2025 Franchise Disclosure Document, Level 3 Valuation is based on unobservable inputs that are significant to the fair value measurement. These inputs reflect the company's own assumptions about the data market participants would use in pricing an asset or liability, developed using the best information available to Embassy Suites By Hilton in specific circumstances.
In simpler terms, Level 3 valuation is used when there isn't readily available market data to determine the value of an asset or liability. Instead, Embassy Suites By Hilton relies on its own internal estimates and assumptions to assess the fair value. This approach is used when observable market data is not available.
This valuation hierarchy is important for prospective franchisees to understand because it provides insight into how Embassy Suites By Hilton determines the value of its assets and liabilities. Understanding the different levels of valuation can help franchisees assess the reliability and accuracy of the financial information provided by the company. While Level 1 relies on direct market prices and Level 2 uses observable market data, Level 3 involves more subjective assessments, which may carry a higher degree of uncertainty.