What is the dependency between gross room sales and the Franchise Fee for Springhill Suites By Marriott?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 1"Gross room sales" means all revenues and receipts of every kind that accrue from the rental of guestrooms (with no reduction for charge backs, credit card service charges, or uncollectible amounts). Gross room sales includes: (i) no-show revenue, early departure fees, late check-out fees, fees for changes to reservations, and other revenues allocable to rooms revenue under the Uniform System of Accounting for the Lodging Industry, Eleventh Revised Edition, 2014, as published by the Hospitality Financial and Technology Professionals, or any later edition, revision, or replacement that we designate (the "Uniform System"); (ii) resort fees, destination fees, and mandatory surcharges for facilities (although inclusion of such fees or surcharges does not constitute approval by us of such fees and surcharges, which may be limited or prohibited); (iii) fees for changes to reservations and attrition or cancellation fees collected from unfulfilled reservations for guestrooms; (iv) the amount of all lost sales due to the non-availability of guestrooms in connection with a casualty event, whether or not you receive business interruption insurance proceeds; and (v) any awards, judgments, or settlements representing payment for loss of room sales. Gross room sales excludes sales tax, value added tax, or similar taxes on such revenues and receipts. You must account for gross room sales on an accrual basis.
- 2 If you are converting a hotel, either one that you currently own or one you are acquiring from a third party, to a SpringHill Suites by Marriott franchise and that hotel is currently managed by us or one of our affiliates, then we may require payment of additional fees in connection with such conversion based on amounts that otherwise would have been payable to us or one of our affiliates under the management agreement that is being terminated, including any incentive management fees or termination fees. In addition to these fees, you may be required to assume ancillary agreements related to the hotel.
- 3 In certain circumstances, we may consider reducing our monthly franchise fees to less than the standard amount, with the reduction typically decreasing over time and applying only in the first few years. If the monthly franchise fees are less than the standard amount, we may also adjust the term of your franchise agreement. In deciding whether to make such changes, we will consider, among other factors: (i) market penetration opportunities; (ii) the location and size of the hotel; (iii)
Source: Item 6 — B. Other Fees That May Apply to Your Transaction (FDD pages 32–64)
What This Means (2025 FDD)
According to Springhill Suites By Marriott's 2025 Franchise Disclosure Document, the franchise fee is directly related to the gross room sales. Gross room sales include all revenues and receipts from guestroom rentals, excluding sales tax, value-added tax, or similar taxes. This encompasses no-show revenue, early departure fees, late check-out fees, reservation change fees, and other revenues allocated to rooms revenue as defined by the Uniform System of Accounting for the Lodging Industry. It also includes resort fees, destination fees, mandatory surcharges for facilities, attrition or cancellation fees from unfulfilled guestroom reservations, lost sales due to guestroom unavailability from casualty events (regardless of business interruption insurance proceeds), and any awards, judgments, or settlements for loss of room sales.
The FDD specifies that Springhill Suites By Marriott calculates gross room sales on an accrual basis. This means that revenue is recognized when earned, regardless of when payment is received. Franchisees are required to accurately account for these gross room sales, as they form the basis for calculating the monthly franchise fees owed to Springhill Suites By Marriott.
The document also mentions that in certain circumstances, Springhill Suites By Marriott may consider reducing the standard monthly franchise fees, particularly in the initial years of operation. This reduction is not guaranteed and is evaluated based on factors such as market penetration opportunities, the hotel's location and size, the economic environment, the cost to convert an existing hotel, the potential for fee reduction to aid in successful development or conversion, the franchisee's commitment to growing the system, and other relevant factors. If the monthly franchise fees are less than the standard amount, Springhill Suites By Marriott may also adjust the term of the franchise agreement.