How Much Does a Hotel Indigo Franchise Owner Make?

Officially, Item 19 measures room-demand and room-rate performance—not owner earnings. For fiscal 2025, it reports results for 52 U.S. Mature Hotels. A Mature Hotel had been open for at least two full years as of December 31, 2025, had fewer than 10% of rooms out of order, was licensed or owned/managed by Holiday Hospitality Franchising, LLC or an affiliate, and was not in default.

The 52-hotel cohort came from 74 U.S. Brand System Hotels at year-end 2025. Item 20 reports all 74 as licensed outlets, while a note states that five were managed by an affiliate. Item 20 lists zero company-owned outlets. That mixed licensed/affiliate-managed cohort is useful for room-performance context, but it is not a pure owner-operated or franchisee-profit population.

FDD source: Hotel Indigo 2026 Franchise Disclosure Document, Item 19, pp. 94–97; Item 20, pp. 97–103. Item 19 says the historic figures are not projections, new hotels will not initially qualify as Mature Hotels, results can differ materially, and the hotel-supplied data were not independently audited.

The estimate applies a broad U.S. hotel EBITDA-to-RevPAR relationship to Hotel Indigo’s official 2025 RevPAR. It is an estimated EBITDA-like owner-earnings proxy for a mature 150-room hotel, not a franchisor-reported result. The Base case uses the official $133.62 average RevPAR; Conservative and Upside use explicit analytical values at 80% and 120% of that average.

• Room count: 150 rooms, the typical Hotel Indigo format used in Item 7. A buyer must recalculate for the actual property.
• Scenario spread: $106.90, $133.62, and $160.34 RevPAR. The 80%/100%/120% spread is editorial analysis, not an FDD distribution or probability forecast.
• Profitability factor: 0.5191, calculated from STR/CoStar’s 2024 U.S. hotel EBITDA per available room divided by U.S. hotel RevPAR. It is a broad industry proxy, not a Hotel Indigo margin.
• Revenue-mix assumption: The factor implicitly imports the broad sample’s relationship between room revenue, non-room revenue, and operating costs. Hotel Indigo food-and-beverage and meeting-space economics may differ materially.
• Expense treatment: The broad EBITDA benchmark is treated as an all-in operating result. Hotel Indigo Royalty Fees, Services Contribution, payroll, manager compensation, occupancy costs, and other normal operating expenses are therefore not subtracted a second time.
• Excluded from owner cash: interest, income taxes, depreciation, amortization, financing principal, personal taxes, capital expenditures, and any cash placed in a Capital Reserve Account.

RevPAR is the largest modeled earnings driver. Applying the same 150-room structure and broad EBITDA factor to Item 19’s observed low, median, average, and high RevPAR produces an analytical range from about $1.60 million to $7.56 million. These are derived sensitivities, not predictions, and the endpoints may reflect properties that are structurally unlike a buyer’s proposed hotel.

The clearest recurring percentage burden is 8.5% of Gross Rooms Revenue: a 5% Royalty Fee plus a 3.5% Services Contribution. This is official FDD evidence for the current U.S. offer. Additional loyalty, distribution, technology, training, and capital-reserve obligations can materially reduce cash, but several depend on booking channel, qualifying revenue, room count, vendor, or franchisor requirements.

FDD source: Hotel Indigo 2026 FDD, Item 6, pp. 27–50. The two percentage-fee illustrations use Base-case room revenue as a practical Gross Rooms Revenue approximation. Actual GRR follows the FDD’s broader room-revenue definition and can differ. The Capital Reserve uses Gross Revenue, a different and broader denominator, so it must not be added mechanically to the 8.5% GRR burden.

Potentially, but only as compensation for work performed—not as passive profit. Item 15 allows the owner to exercise direct management control only if Holiday Hospitality Franchising, LLC approves the owner to manage the hotel. The licensor may require a qualified management company or experienced General Manager, Director of Sales, and Food & Beverage Director. Each hotel must have its own qualified General Manager and an exclusive Director of Sales.

Role sources: Hotel Indigo 2026 FDD, Item 15, pp. 88–89; U.S. Bureau of Labor Statistics, May 2024 median annual wage of $66,880 for lodging managers in traveler accommodation. BLS wage data exclude self-employed owner compensation and do not establish the market pay of an experienced upscale-hotel General Manager. A third-party management-company fee is not disclosed and is not estimated.

Actual owner earnings can fall below or rise above the scenario range because the model has no same-brand profit-and-loss statement. The largest uncertainty is whether a specific Hotel Indigo’s total revenue and cost structure resemble the broad 2024 U.S. hotel sample used for the EBITDA factor.

• Market-level RevPARHotel Indigo’s 2025 Mature Hotel RevPAR ranged from $56.42 to $266.17. Demand generators, competition, seasonality, room supply, airport or downtown exposure, and pricing execution can dominate the result.
• Food-and-beverage economicsThe official Hotel Indigo development profile emphasizes destination restaurants and bars. Non-room revenue can improve total revenue, but kitchens, bars, events, and meeting services add labor, food cost, utilities, and operating complexity.
• Management and payrollItem 15 may require experienced dedicated leaders. Wage rates, staffing ratios, union exposure, benefits, management-company fees, and owner qualifications vary by property and market.
• Booking-channel mixLoyalty contributions, travel-agent commissions, Global Distribution System fees, direct-connect charges, group-and-meeting fees, and digital marketing charges vary with how rooms are sold.
• Capital spending and reserve fundingEBITDA is before depreciation and capital expenditures. A required Capital Reserve of up to 5% of Gross Revenue, renovation work, furniture replacement, or a property-improvement plan can materially reduce cash distributions.
• FinancingInterest and principal are outside the operating estimate. A highly leveraged acquisition or development may produce far less cash available to the owner even when hotel EBITDA is positive.
• Ramp-up and cohort mismatchItem 19 covers hotels open for at least two full years and excludes hotels with substantial out-of-order inventory or default. A new development, conversion, or recently transferred hotel may not perform like the mature cohort.

A buyer should replace broad assumptions with property-specific evidence. The FTC advises buyers to evaluate Item 19’s basis and ask for written substantiation. For Hotel Indigo, the decisive work is obtaining comparable-property profit-and-loss evidence, validating the local RevPAR forecast, and separating operating EBITDA from capital and financing cash flows.

• Request the written substantiation for the 2026 Item 19 figures, including the hotel list, room counts, ownership or management status, and methodology.
• Ask which of the 52 Mature Hotels most closely match the proposed market, room count, development path, service model, food-and-beverage program, and age.
• Obtain actual or anonymized franchisee profit-and-loss statements showing rooms revenue, food-and-beverage revenue, payroll, occupancy costs, management fees, franchise fees, distribution costs, repairs, reserve funding, and EBITDA.
• Interview current and former licensees from Item 20 about manager compensation, management-company charges, capital projects, loyalty and channel fees, and cash distributions.
• Confirm in writing whether the owner is approved to manage, which dedicated positions are required, and whether a management company or affiliate manager is a condition of approval.
• Build debt service, taxes, replacement reserves, renovation capital, and personal compensation below the operating model rather than treating EBITDA as take-home pay.

The strongest defensible range is approximately $3.0 million to $4.6 million of annual pre-tax hotel EBITDA for a modeled mature 150-room U.S. Hotel Indigo, with a Base scenario near $3.8 million. It is a scenario-based earnings proxy, not an official Item 19 profit or owner-compensation figure. The strongest official evidence is the 2025 average RevPAR of $133.62 for 52 Mature Hotels.

The most important earnings driver is property-level RevPAR. The largest unresolved uncertainty is the absence of a same-brand profit-and-loss disclosure showing total revenue, labor, management costs, food-and-beverage economics, franchise charges, capital spending, and cash distributions. Before underwriting the opportunity, a buyer should verify Item 19 substantiation, obtain property-specific operating statements, and test the model against current and former Hotel Indigo licensee interviews.