How Much Does an AC Hotels Franchise Cost?

A newly constructed, prototypical AC Hotels by Marriott hotel requires an estimated initial investment of $18,868,010 to $49,837,710 for 100 to 150 guestrooms, or $27,994,910 to $61,181,210 for 151 to 200 guestrooms. Those 2026 FDD Item 7 ranges exclude real estate, building permit, tap and impact fees, insurance, and the recommended hard-cost contingency because the franchisor does not provide determinable figures for those items.

Capital snapshot

The 2026 Item 7 estimate covers the franchise application, pre-opening services, property systems, construction, furnishings, technology, operating supplies, design work, opening advertising, start-up costs and three months of Additional Funds. It separates a 100-150 guestroom hotel from a 151-200 guestroom hotel and uses per-guestroom pricing for several large categories.

Franchisor, professional and launch payments

Source: 2026 FDD, Item 7, pages 58-60. The Opening Advertising estimate includes an approximately $50,000 grand-opening event, public-relations assistance and an approved photographer; additional media activity is not included.

Premises, construction and operating assets

Source: 2026 FDD, Item 7, pages 58-63. The official total excludes categories identified as not determinable.

Opening payroll and working capital

The Additional Funds allowance is already inside Item 7. It excludes franchise fees, management fees, FF&E reserves, personal property and real estate taxes, permits and licenses, building insurance, and operating leases. It is not presented as a break-even estimate. Source: 2026 FDD, Item 7, page 63.

How should the official range be used in a capital plan?

The disclosed low and high figures are boundaries for the stated prototype, not a promise that a particular project will land inside them. A buyer should begin with the official total for the correct room-count band, then maintain a separate schedule for every cost that the disclosure labels variable or not determinable. That preserves the franchisor's stated total while making the unresolved site obligations visible instead of burying them inside an invented midpoint.

The per-room entries also should not be multiplied independently and substituted for the published total. The final range reflects several categories, room-count assumptions and cost relationships at once. A project team can use the per-room lines to test contractor and procurement proposals, but the official total remains the controlling disclosure figure. Using the lowest value from every line can create a false minimum, particularly when land, municipal charges, coverage premiums and contingency are still unknown.

The right capital schedule therefore has three columns: amounts already stated in the disclosure, amounts supported by a signed proposal or third-party estimate, and unresolved amounts awaiting evidence. This is especially important for deposits and progress payments. A project may have sufficient total financing yet still face a cash shortfall if supplier deposits, construction draws and pre-opening payroll fall due before loan proceeds or equity contributions are available.

Refundability should be tracked separately from timing. Most payments to Marriott are described as non-refundable. The application payment has a limited refund mechanism before approval or after rejection, but deductions apply. Payments to outside parties follow the buyer's contracts with those parties. A cost can therefore be included in the project total while carrying a very different cancellation risk from another line with the same due date.

The 2026 FDD does not require the entire estimated initial investment to be paid to Marriott at signing. Cash moves through an application, development, construction, opening and operating sequence, with most construction and asset costs paid to third parties as arranged.

Sources: 2026 FDD, Item 5, pages 25-30; Item 7, pages 58-63. Federal disclosure timing is explained in the FTC Franchise Rule guidance.

How to build a sources-and-uses schedule without inventing a budget

A practical schedule should show who receives each payment, the contractual due date, whether the amount is refundable, and which funding source is available on that date. The same project may use sponsor equity for application and design work, a construction facility for eligible building draws, separate equipment financing, and operating cash for payroll and launch expenses. Listing only the total financing commitment can hide a timing mismatch between an invoice and the first date a lender will reimburse it.

Each third-party proposal should use the same scope language as the disclosure. A contractor's building quote may omit owner-supplied equipment, technology, design fees, testing, freight, taxes or opening supplies. A procurement quote may assume a different room count or specification package. The project team should mark every exclusion and cross-reference it to another signed proposal or to an unresolved line. This avoids treating an omitted amount as zero.

Contingent and optional obligations belong in a separate scenario schedule. Examples include extra training, a delayed opening, additional inspections, technology migration, a management-company change or a non-prototype design review. The buyer does not need to assume that every contingent charge will occur, but should identify the event that activates it, the party responsible for controlling that event and the source of funds if it happens.

Finally, the schedule should be updated when the room count, site plan, opening date or ownership structure changes. Those decisions can alter application payments, per-room allowances, supplier quantities, training needs and guaranty review. A revised project should be compared with the current contractual documents rather than carried forward from an earlier spreadsheet whose assumptions no longer match the approved hotel.

The principal recurring charges are a 6.0% Franchise Fee on gross room sales and a Program Services Contribution equal to 3.85% of gross room sales, plus $10,000 per year and $220 per guestroom per year. The 3.85% component includes a 2.5% Marketing Fund contribution. Both are payable by the 15th day after each month ends.

Source: 2026 FDD, Item 6, pages 31-47. “Gross room sales” is defined in Item 6 and is not the same as total hotel revenue.

Why the monthly percentages should not be collapsed into one rate

The revenue-based charges use different definitions and can apply to different transactions. The core monthly franchise charge uses room revenue as defined in the agreement. The service contribution uses the same room-revenue basis but also includes annual and per-room fixed components. Loyalty charges use qualifying revenue associated with members earning points or miles, while selected event charges use an event-specific basis and cap. Combining all of them into a single percentage would erase those distinctions and could overstate or understate the amount due.

The fixed components also matter as the property size changes. A per-room annual charge scales with the number of guestrooms even when revenue does not move in the same proportion, while a property-level annual charge remains fixed. Technology charges can depend on workstations, devices, servers or transactions. A useful operating budget therefore maps each charge to its own driver rather than applying one blended percentage to all hotel receipts.

Some programs are normally optional but become mandatory when an operator is new to the system, lacks designated personnel or is placed into a required training pathway. That status should be resolved in writing before closing the capital stack. The cost question is not only whether a program exists; it is whether the specific owner, management company and hotel will be required to participate, for how long, and which setup, travel or add-on expenses sit outside the listed rate.

Which fees are triggered by a transaction, delay or compliance event?

• Conversion, transfer or relicensing.A Property Improvement Plan costs $12,000; a transfer application fee is the greater of $200,000 or $500 per guestroom; outside-counsel and improvement costs can also apply.
• PIP changes or delay.A pre-expiration revision is $5,000, a 12-month-past-issuance refresh is $6,000, and a 24-month reissue is $12,000. Relicensing PIP delay can trigger 1% of gross room sales per month, while failed completion re-evaluations cost $10,000 each.
• Construction deadline extension.The stated extension fee is $10,000 when the request falls outside the automatic-extension conditions; it is refundable if the extension is denied.
• Quality-assurance failure.Red Zone charges range from $25 to $100 per guestroom, capped at $50,000 per six-month tracking period, plus $2,500 for each required meeting and possible supplemental-program costs.
• Custom or non-prototype design.Custom Design & Construction Review Services can cost $20,000; non-recommended design-firm review and coordination can add screening and coordination fees.
• Late payment, audit or default.Interest is the lesser of 18% per year or the legal maximum. An underpayment of 5% or more can require reimbursement of audit costs. Default termination can produce formula-based liquidated damages and a $12,000 removal-from-system fee.

No. The 2026 Item 7 ranges apply only to typical newly constructed AC Hotels by Marriott properties in the two disclosed room-count bands. The FDD says conversion, acquisition, spa, residential, condominium and multi-family costs may be significantly different and does not provide a meaningful total estimate for those paths.

Why a conversion estimate cannot be reverse-engineered from the new-build table

An existing property may avoid portions of ground-up construction while creating a different set of obligations. The building can require demolition, replacement of systems, redesign of public areas, accessibility work, fire and life-safety upgrades, technology migration, new signage and a full brand-standard renovation. The condition of retained equipment and the timing of any temporary closure can also change both the direct work and the cost of reopening support.

The property-improvement process is therefore more than an administrative payment. It defines the required scope that will determine the owner's actual renovation contract. The fee for preparing or revising that plan is measurable, but the work required by the plan is not disclosed as a standard total. Treating the administrative fee as the conversion budget would omit the central capital obligation.

A residential, condominium or multi-family component adds another contractual layer. The hotel and residential portions can have separate training, legal-document review, brand-license, audit and program charges, while shared facilities and ownership controls affect the physical project. Those obligations depend on the approved structure and cannot be inferred from the two ordinary hotel room bands.

What the official total does not resolve

The 2026 FDD does not state a fixed Liquid Capital, Net Worth or Non-Borrowed Funds minimum for an AC Hotels by Marriott applicant. MIF, L.L.C. reviews the applicant's financial information, ownership structure, hotel real estate and debt structure, then determines guaranty requirements. Principals may be required to guarantee the franchisee's obligations; in limited cases, Marriott may accept an entity with substantial net worth and liquidity as guarantor.

Estimated Initial Investment

The Item 7 project-cost range for the stated new-build format. It is not a stated cash-on-hand threshold.

Liquid Capital

No fixed dollar minimum is disclosed in the 2026 FDD.

Net Worth

No fixed dollar minimum is disclosed; net worth and liquidity are factors in guarantor approval.

Personal or entity guaranty

Determined after review of financial information, ownership and debt structure.

Financing

Marriott generally does not finance or guarantee the investment. In very limited, discretionary circumstances, it may offer a contingent guaranty or mezzanine loan with project-specific terms.

Item 10 does not promise financing approval, standard rates or standard loan terms. The distinction matters: a $27.99 million Item 7 minimum for the larger format does not establish the amount of equity, liquidity or debt a lender or Marriott will accept. Public-company information about the parent is available through Marriott International's SEC filings.

How financing and guaranty review affect the capital decision

A project can satisfy a construction lender and still fail the franchisor's ownership or guaranty review, because the two decisions evaluate different obligations. A lender focuses on repayment, collateral, equity and draw conditions. The franchisor also considers who controls the franchisee, who will stand behind the contractual duties, the operating record of the proposed parties and whether the debt structure is acceptable for the hotel.

Conversely, approval of an applicant or guarantor is not a financing commitment. The disclosure describes any credit support or mezzanine lending as rare, discretionary and project-specific. A buyer should build the transaction on committed third-party financing and documented equity rather than assume that the brand will fill a funding gap. Any proposed brand support needs its own written terms, security requirements, fees, default provisions and repayment analysis.

Because no fixed cash or wealth threshold is published, the absence of a number should not be read as a low requirement. It means the decision is individualized. The application package should show the source and timing of equity, the ownership chain, the proposed guarantors, existing obligations and the ability to fund costs that fall outside the disclosed total.

The key unresolved question is not the published royalty percentage; it is whether the specific site, design and development path fit the 2026 new-build assumptions. A buyer should reconcile the FDD range with project-specific contracts without replacing the official total with an unsupported “typical” budget.