What was the allocation of expenses to affiliated companies for Even Hotels in 2022 (in thousands)?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
y, no such opinion is expressed.
- x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
- x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Atlanta, Georgia April 15, 2025
Consolidated Balance Sheets
(In Thousands)
| 2024 | 2023 | 2022 |
|---|
Consolidated Statements of Net Income (In Thousands)
| Year Ended December 31 | |||||
|---|---|---|---|---|---|
| 2024 | 2023 Revised ¹ | 2022 Revised ¹ | |||
| Revenues | |||||
| Fee business | $ | 896,837 | $ 869,949 | $ | 808,297 |
| Hotel operations | 92,579 | 88,417 | 78,787 | ||
| Other | 339,236 | 304,264 | 264,377 | ||
| System Fund and reimbursable revenues | 2,425,248 | 2,280,490 | 1,880,587 | ||
| Total revenues | 3,753,900 | 3,543,120 | 3,032,048 | ||
| Operating expenses | |||||
| Bad debt expense (release) (Note 2) | 9,170 | (1,988) | (3,495) | ||
| Property and other taxes, insurance and leases | 25,576 | 46,084 | 49,435 | ||
| Maintenance and repairs | 51,344 | 59,588 | 48,991 | ||
| General and administrative expenses | 574,738 | 563,909 | 414,334 | ||
| Other hotel operations | 9,038 | 7,798 | 7,397 | ||
| Mark-up cost charged by affiliated companies | 12,904 | 16,240 | 12,684 | ||
| Allocation of expenses to affiliated companies | (155,437) | (168,690) | (134,560) | ||
| Depreciation and amortization of software | 32,766 | 33,911 | 36,042 | ||
| Amortization of finite-lived intangible assets | 4,636 | 5,734 | 5,088 | ||
| Impairment loss |
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, the allocation of expenses to affiliated companies in 2022 was a negative $134,560,000. This figure represents a reduction in expenses for Even Hotels due to allocations from its affiliated companies.
In practical terms, this means that Even Hotels received financial benefits from its affiliated companies, which lowered its overall operating expenses. This could be due to shared services, resources, or other cost-sharing arrangements between Even Hotels and its affiliates. The negative allocation suggests that the affiliated companies absorbed a portion of Even Hotels' expenses, resulting in a net financial advantage for the brand.
For a prospective franchisee, this indicates that Even Hotels has a financial structure that involves expense sharing with its affiliates. This could potentially lead to lower operating costs for the franchisee, as certain expenses might be subsidized or covered by the affiliated companies. However, it's important for potential franchisees to understand the nature of these expense allocations and how they might impact their own financial performance. It would be prudent to inquire about the specific services or resources provided by the affiliated companies and the terms of the expense allocation agreements to fully assess the financial implications for their franchise.
It is important to note that these allocations are not intended to represent the costs that would be incurred if Even Hotels were a standalone operation, as stated in the FDD. This means that the financial performance of an Even Hotels franchise may be different from that of an independent hotel due to these inter-company allocations.