How does Surestay Hotel By Best Western amortize goodwill, and over what period?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
| (in thousands) | 2023 | 2022 | | |---|---|---|---| | | Current contract liabilities | $ 122,503 | $ 100,161 | | | Non-current contract liabilities | 221,278 | 246,706 | | | Total contract liabilities | $ 343,781 | $ 346,867 | | (in thousands) | 2023 | 2022 | | | | Liability related to the loyalty program | $ 292,438 | $ 292,993 | | | Affiliation fees received from hoteliers | 51,343 | 53,874 | | | Total contract liabilities | $ 343,781 | $ 346,867 | The Company has elected the private-company alternative to amortize goodwill over 10 years. Amortization expense for goodwill was approximately $0.8 million and $0.8 million for the years ended November 30, 2024 and 2023, respectively, and is estimated to be
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
According to the 2025 FDD, Surestay Hotel By Best Western amortizes goodwill using the private-company alternative method over a period of 10 years. For the years ended November 30, 2024 and 2023, the amortization expense for goodwill was approximately $0.8 million each year. The company estimates this expense to remain approximately $0.8 million annually for the fiscal years ending 2025 through 2028.
This means that Surestay Hotel By Best Western recognizes the expense of goodwill, which is an intangible asset representing the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination, gradually over a 10-year period. By electing the private-company alternative, Surestay Hotel By Best Western can simplify its accounting practices related to goodwill, as private companies often have different reporting requirements than public companies.
For a prospective Surestay Hotel By Best Western franchisee, understanding how goodwill is amortized is important for assessing the financial health and stability of the company. While the franchisee is not directly involved in this accounting practice, it provides insight into how the parent company manages its acquisitions and intangible assets, which can indirectly affect the support and resources available to franchisees. The consistent amortization expense suggests a stable valuation of goodwill related to past acquisitions.