How Much Does a Red Lion Hotel Franchise Owner Make?

Official answer: for the 2026 U.S. offer covering both the 125-room and 250-room formats, the FDD does not disclose sales, operating profit, EBITDA, net income, cash flow, owner compensation, or any other financial performance measure for Red Lion franchisees. Item 19, page 66, states that the franchisor makes no representation about future franchisee performance or past performance of company-owned or franchised outlets.

That absence matters. There is no same-brand average unit volume, median sales figure, profit distribution, reporting cohort, percentage-achieving result, or mature-hotel subset to use as a direct earnings anchor. Under the Federal Trade Commission Franchise Rule guidance, an earnings claim must have a reasonable basis and appear in Item 19, subject to limited exceptions such as actual records for an existing outlet. A buyer therefore should not treat an oral projection, broker estimate, or generic hotel margin as a Red Lion result.

Item 20, page 67, provides system structure rather than economics. It reports 59 franchised Brand Hotels and one company- or affiliate-owned hotel at December 31, 2025. It also notes one franchised termination between January 1 and February 28, 2026. Those figures confirm an operating U.S. system, but they do not reveal revenue, profitability, owner distributions, or the performance of the 125-room and 250-room formats.

Estimated answer: for the 125-room and 250-room FDD formats, the model applies a 2025 U.S. hotel revenue benchmark and a 2022 U.S. Accommodation net-income margin proxy. The applicable periods are 2025 for revenue, 2022 for the margin, and a mature operating year for the scenario. The result is not a probability forecast or a same-brand historical result.

What revenue anchor is used?

Benchmark answer: CoStar/STR reported 2025 U.S. hotel RevPAR of $100.02, with 62.3% occupancy and a $160.54 average daily rate. The model calculates annual room revenue as rooms × 365 × RevPAR. That produces a central room-revenue proxy of $4.56 million for 125 rooms and $9.13 million for 250 rooms. The CoStar/STR 2025 U.S. hotel performance release covers the national industry, not Red Lion properties or a specific market.

The Conservative and Upside revenue cases use 80% and 120% of that central benchmark. This is an editorial sensitivity spread, not an FDD quartile and not evidence that an individual hotel has a 20% downside or upside probability.

What margin anchor is used?

Derived answer: the IRS 2022 Corporation Complete Report lists $153.824 billion of total receipts, $24.196 billion of net income, and $3.299 billion of deficit for the Accommodation minor industry. Net income less deficit divided by total receipts equals 13.6%. The model uses 10.6%, 13.6%, and 16.6%—the benchmark minus three percentage points, the benchmark, and the benchmark plus three percentage points. The underlying IRS Corporation Complete Report tables aggregate many corporate lodging businesses and are not limited to franchises, Red Lion hotels, midscale hotels, or single-property owners.

This IRS proxy is closer to residual business income than gross operating profit or EBITDA, but it is still imperfect. It includes interest and depreciation as reported for tax purposes; it does not identify financing principal, owner distributions, replacement reserves, or personal income taxes. The scenario does not subtract Item 6 fees a second time because the IRS net-income measure is an all-in corporate result. Separately subtracting every FDD fee would risk double counting expenses already embedded in the benchmark.

Official and derived answer: for both formats in the 2026 U.S. FDD, Item 6, pages 18–27, imposes a 5% Royalty on Gross Rooms Revenue, a 3% Brand Promotion Fee on Gross Rooms Revenue, and a 3% Loyalty Program charge on Qualified Revenue. The Brand Promotion Fee and Loyalty Program rate may each increase to 4.5%. These rates use different defined bases, so they should not be collapsed into a single percentage without property-level booking data.

Gross Rooms Revenue is not total hotel revenue. The FDD definition includes room-rental revenue and specified room-related amounts, while excluding separately charged food and beverage, certain entertainment and telephone charges, gratuities, and applicable taxes. Qualified Revenue is a separate loyalty-program base. A buyer needs a channel and loyalty mix to calculate the actual annual burden.

Estimated answer: for either format in the 2026 U.S. offer, an active owner may capture the labor value of one replaced lodging-manager position, but that amount is compensation for work rather than passive business profit. Item 15, pages 60–61, says personal participation is not required, although recommended. An owner who does not personally manage the hotel must use a management company approved by the franchisor.

The Bureau of Labor Statistics lodging-manager profile reports a May 2024 median annual wage of $68,130, including $66,880 in traveler accommodation. BLS wage data exclude self-employed workers and do not include the employer’s full payroll-tax or benefit cost. The chart therefore adds $68,130 only as a transparent labor-value benchmark for a 125-room illustration. It does not assume that one owner can replace an entire management company or every management layer in a 250-room full-service property.

Manager-run owner earnings

Residual business-income proxy after normal operating expenses and management labor as embedded in the IRS benchmark, before financing principal and personal income taxes.

Owner-operator benefit

Manager-run residual profit plus the market value of one management role performed by the owner. It combines profit and labor compensation.

Debt service

Interest is embedded in the IRS net-income proxy; financing principal is not. An actual loan schedule can materially reduce cash distributed to the owner.

Capital expenditure

No separate furniture, fixtures, equipment or renovation reserve is deducted. IRS depreciation partially reflects capital consumption but is not a property-specific cash reserve.

Personal taxes

Not estimated. Entity structure, state, deductions and owner circumstances determine after-tax outcomes.

Uncertain answer: for both modeled formats, the 2025 revenue benchmark and 2022 margin proxy leave local RevPAR and the property’s true all-in expense structure as the dominant variables. The national CoStar/STR benchmark blends markets and chain scales, while the IRS Accommodation margin blends profitable and unprofitable corporations, ownership structures, service levels and portfolios. Neither source isolates Red Lion franchisees, the official Red Lion Hotels franchise format, Red Lion Inn & Suites, conversions, new builds, mature outlets, or a comparable franchise cohort.

The official franchise page describes Red Lion Hotels as a full-service brand competing with full-service midscale brands and targeting the upper-midscale sector. That market positioning does not establish a property’s room rate, occupancy, operating margin or owner compensation. The U.S. Census NAICS 721110 lodging classification likewise covers a broad set of hotels and motels rather than one franchise system.

• Mature-year assumption: the model is not a ramp-up forecast and does not estimate opening-year disruption, renovation downtime or stabilization.
• Room-revenue assumption: it applies national RevPAR to every available room and does not add food-and-beverage, meeting, parking or other revenue.
• Margin assumption: 10.6%, 13.6% and 16.6% are broad corporate accommodation proxies, not Red Lion margins.
• Management assumption: manager-run economics are embedded in the industry proxy; a separate management-company fee may be higher than one employee wage.
• Fee assumption: FDD fees are reviewed structurally but not subtracted twice from an all-in net-income margin.
• Financing assumption: financing principal is excluded, while the IRS benchmark’s aggregate interest and depreciation treatment may not resemble the buyer’s capital structure.
• Property assumption: insurance, property tax, utilities, payroll, repairs and capital requirements vary sharply by location, age, amenities and physical condition.

Decision answer: for a current U.S. purchase under the 2026 FDD and either hotel format, obtain property-level evidence that replaces the national assumptions. Because Item 19 supplies no financial performance representation, the most decision-useful records are written substantiation for any permissible supplemental claim, actual records for an existing hotel under consideration, and comparable franchisee profit-and-loss statements with consistent definitions.

• Confirm whether a later amendment or successor FDD changes Item 19, Item 6 rates, the legal franchisor, or the offered formats.
• Request trailing 36-month occupancy, ADR, RevPAR, room revenue, total revenue and monthly seasonality for the specific hotel or a tightly comparable market set.
• Separate Gross Rooms Revenue, Qualified Revenue, food-and-beverage revenue and group revenue so Royalty, Brand Promotion, Loyalty Program and transaction fees can be reproduced.
• Obtain payroll by department, management-company charges, utilities, insurance, property tax, repairs, reservation commissions and required technology costs.
• Identify every exclusion from the P&L, including owner salary, related-party rent, interest, depreciation, replacement reserves, renovation spending and financing principal.
• Interview current and former franchisees listed in Item 20 about manager-run versus owner-managed staffing, renovation cycles, channel mix and the cost of meeting Brand Standards.
• Reconcile the proposed loan schedule and required capital reserve separately from operating earnings; do not convert the result into after-tax take-home pay.

Estimated answer: for a mature U.S. operating year under the two 2026 FDD formats, the strongest defensible public scenario is approximately $386,000–$908,000 annually for the 125-room Red Lion Inn & Suites model and $773,000–$1.82 million for the 250-room Red Lion Hotels model, before financing principal and personal income taxes. The figures are independent Mode D estimates with Limited evidence confidence—not official Item 19 results.

The most important earnings driver is property-level RevPAR, because room rate and occupancy determine the revenue base before labor, franchise fees and fixed property costs. The largest unresolved uncertainty is the absence of same-brand sales and profit data for comparable mature franchised hotels. A buyer should replace the national RevPAR and IRS margin proxies with written Item 19 substantiation where available, actual records for an existing hotel, a reproducible fee bridge, and consistent franchisee interviews before using any range in an investment decision.