For a modeled 250-room U.S. Sheraton hotel, the strongest defensible range is an independent hotel-level EBITDA estimate, not an official owner-income disclosure. The base scenario is approximately $5.41 million before interest, debt principal, depreciation and amortization, capital expenditures, and personal income taxes.
This range is an independent analytical scenario. It is not an Item 19 financial performance representation by MIF, L.L.C. It combines the 2026 Sheraton Franchise Disclosure Document's RevPAR and 250-room format facts with separately identified U.S. hotel-industry benchmarks and explicit scenario assumptions. Actual results can differ materially by market, hotel size, property condition, food-and-beverage mix, labor, occupancy, financing, capital needs, owner involvement, and execution.
Legal franchisor: MIF, L.L.C., a subsidiary of Marriott International, Inc. FDD: 2026 Sheraton Domestic Franchise Disclosure Document, issued March 31, 2026. Item 19: 2025 ADR, occupancy, RevPAR, RevPAR Index, reservation-channel, and Marriott Bonvoy metrics for qualifying franchised Sheraton hotels in the United States and Canada; no profit or owner-compensation figure. Model format: the 250-guestroom new-build example in Item 7. External benchmark: CoStar/STR 2024 U.S. hotel RevPAR, TRevPAR, and EBITDA per available room. Owner-labor benchmark: U.S. Bureau of Labor Statistics 2024 lodging-manager pay. Checked July 17, 2026.
Estimated for 250 rooms using the FDD average RevPAR and the U.S. industry profitability conversion.
Room revenue per available room for 128 qualifying franchised hotels.
The middle reported hotel result; it is used as the conservative revenue anchor.
STR Included Hotels represented about 90.8% of franchised U.S.-and-Canada hotels.
Derived from 2024 CoStar EBITDA PAR of $51.88 divided by TRevPAR of $209.67.
6% room franchise fee plus 2.02% Program Services, before loyalty and other variable charges.
What does Sheraton Item 19 actually report?
Officially, Item 19 reports room-performance metrics, not owner earnings. For calendar 2025, the relevant population was 128 franchised Sheraton hotels in the United States and Canada that reported STR data, had operated as a franchised Sheraton for at least two years, and avoided specified renovation or expansion disruptions. The disclosure does not provide hotel operating profit, EBITDA, net income, cash flow, owner salary, distributions, or total hotel revenue.
| Official 2025 metric | Average | Median | Reported range |
|---|---|---|---|
| Average Daily Rate (ADR) | $172.88 | $152.58 | $99.41–$330.33 |
| Occupancy (OCC) | 66.1% | 64.9% | 29.2%–96.7% |
| Revenue per available room (RevPAR) | $114.24 | $99.26 | $38.86–$284.10 |
| RevPAR Index | 92.6 | 97.3 | 39.1–238.9 |
The 2026 FDD says 165 Sheraton hotels were open in the United States and Canada at year-end 2025, including 141 franchised hotels and 24 company-owned, managed, or leased hotels. Item 20 shows franchised outlets increased from 140 to 141 during 2025, while total outlets declined from 166 to 165. These counts describe the system and the eligible cohort; they do not establish profitability.
RevPAR is gross room sales divided by available rooms. It excludes food-and-beverage revenue and does not deduct payroll, utilities, franchise fees, management fees, property costs, repairs, insurance, or capital expenditure. A 250-room hotel at $114.24 RevPAR produces approximately $10.42 million of annual room revenue, not $10.42 million of owner income.
How representative is the official cohort?
The cohort is broad but not U.S.-only. The 128 STR Included Hotels were approximately 90.8% of the 141 franchised hotels in the combined U.S.-and-Canada system. Item 19 converts Canadian results to U.S. dollars and excludes younger hotels and properties with material recent renovation or expansion disruption. The combined-country design, maturity filter, and excluded disruption periods reduce confidence when projecting a specific new U.S. property.
How is the annual earnings range estimated?
The estimate converts Sheraton RevPAR into a total-revenue proxy and then into hotel-level EBITDA. The conservative scenario uses the FDD median RevPAR of $99.26, the base scenario uses the FDD average of $114.24, and the upside scenario uses 120% of the average, or $137.09. The 20% uplift is an editorial sensitivity assumption, not a franchisor forecast.
| Scenario | RevPAR anchor | Estimated total revenue | Estimated pre-tax owner earnings proxy |
|---|---|---|---|
|
Conservative FDD median, not a loss case |
$99.26 | $19.00M | $4.70M |
|
Base FDD average |
$114.24 | $21.87M | $5.41M |
|
Upside 120% of FDD average |
$137.09 | $26.24M | $6.49M |
A 250-room property; values are independent estimates before financing, capital expenditures, and personal taxes.
Interpretation: the $1.79 million spread is driven by RevPAR, while the industry revenue conversion and EBITDA margin remain constant. Sources: 2026 Sheraton FDD, Item 19, pp. 110–114; CoStar 2024 U.S. hotel performance; CoStar 2024 U.S. hotel profitability data.
Per available room per day; each step uses a disclosed metric or a reproducible benchmark ratio.
Interpretation: $59.30 EBITDA per available room × 250 rooms × 365 days produces the $5.41 million base estimate. The total-revenue conversion and EBITDA margin are broad U.S. hotel benchmarks, not Sheraton-specific expense disclosures.
- Room count: 250 guestrooms, matching the Item 7 new-build example; actual Sheraton hotels range from approximately 130 to 1,800 guestrooms.
- Revenue conversion: 2024 U.S. hotel TRevPAR divided by U.S. RevPAR, producing a 2.098× total-revenue-to-room-revenue proxy.
- Profit conversion: 2024 U.S. hotel EBITDA PAR divided by TRevPAR, producing a 24.7% EBITDA proxy.
- Interest and debt: excluded. Loan interest and principal can materially reduce cash distributions.
- Depreciation, amortization, capital expenditures, and replacement reserves: excluded from the EBITDA proxy; these can be substantial for a full-service hotel.
- Taxes: no personal or entity-level income-tax estimate is made.
Does an owner-operator earn more than a manager-run owner?
An active, approved owner may capture some management labor value, but the business does not become passive or manager-free. Item 15 requires the franchisee to operate the hotel or retain an approved management company, and a trained general manager must directly supervise the hotel on premises full time. MIF, L.L.C. may decide that the franchisee is not qualified and require a management company.
- Manager-run owner
- The $4.70M–$6.49M scenario range is treated as residual hotel-level EBITDA after the benchmark operating cost structure, which is assumed to include normal management labor. It remains before financing and capital expenditures.
- Owner as approved general manager
- Using the BLS median lodging-manager wage of $68,130 as a conservative labor-value reference, the base estimated owner-operator benefit becomes about $5.48M. The added $68,130 compensates the owner for work performed; it is not passive profit.
- Third-party management company
- A hotel-management agreement may include base and incentive fees that differ materially from the broad industry proxy. Item 19 does not disclose a Sheraton management-fee schedule or owner-level results.
The BLS lodging-manager median of $68,130 covers a broad national occupation. A general manager for a 250-room full-service hotel may have a different salary, bonus, benefits, and staffing structure. The owner should replace that benchmark with the local, fully loaded compensation for the exact role the owner can legitimately perform.
How do Sheraton fees affect the earnings estimate?
Item 6 imposes material recurring charges, but the scenario does not deduct them a second time. The CoStar EBITDA benchmark is used as an all-in operating proxy, and its public release does not provide enough detail to prove which franchise and distribution charges are included. Subtracting Item 6 fees again could double-count expenses. The fee table below is therefore a burden check and a due-diligence requirement, not an additional deduction from the published scenario.
| Item 6 obligation | Official amount | Base-case interpretation |
|---|---|---|
| Franchise Fees | 6% of gross room sales plus 2% of gross food-and-beverage sales | Room component alone would be about $625,000 on $10.42M of modeled room revenue. |
| Program Services Contribution | 2.02% of gross room sales, plus $47,144 per year, plus $510 per guestroom per year | About $385,000 for a 250-room base scenario, including $174,644 of fixed annual charges. |
| Marriott Bonvoy Loyalty Program | 4.2% of qualifying revenue, reduced to 4.0% through December 2027, plus 1% of qualifying select-event revenue subject to the stated cap | Cannot be reproduced from RevPAR alone because qualifying revenue and event revenue are not disclosed. |
| Other programs and technology | Variable charges for revenue management, Account Sales, transaction-based media, systems, support, and other programs | Property-specific participation and transaction mix must be obtained from actual invoices and operating statements. |
In the base scenario, the clearly calculable room-based Franchise Fee and Program Services Contribution total approximately $1.01 million annually, before the food-and-beverage fee, Marriott Bonvoy charges, transaction-based distribution, technology, management-company fees, and other variable amounts. This does not mean the scenario should be reduced by another $1.01 million; it shows why a buyer must verify whether the chosen external margin already captures the full Sheraton fee burden.
What could move actual owner earnings outside the range?
The largest uncertainty is the operating-margin proxy, followed by local RevPAR and financing. Item 19 supplies room revenue performance but no Sheraton expense statement. The scenario therefore combines a mixed U.S.-and-Canada Sheraton revenue cohort with a broad U.S. hotel P&L benchmark. That compatibility gap is why the evidence rating is LIMITED.
- Market and format: urban, suburban, airport, convention, and resort hotels can have very different ADR, occupancy, food-and-beverage revenue, labor, and fixed costs.
- Property size: the 250-room model is only the Item 7 example; Sheraton hotels span approximately 130 to 1,800 guestrooms.
- Hotel maturity and renovation: the Item 19 cohort excludes hotels open less than two years and certain materially disrupted properties.
- Country mix: Item 19 combines U.S. and Canadian hotels and does not publish a U.S.-only RevPAR breakout.
- Ancillary revenue: the total-revenue multiplier is an industry proxy; banquet, catering, parking, resort, and other department revenue vary sharply.
- Labor and management: staffing levels, union status, benefits, management-company terms, and owner participation can change residual earnings.
- Capital and debt: interest, principal, property-improvement plans, renovations, furniture-fixture-equipment reserves, and other capital spending can materially reduce distributable cash.
No debt-service estimate is published because Item 10 does not establish one standard financing package for every buyer and hotel. For a capital-intensive full-service property, financing terms may change owner distributions more than the approximately $68,130 owner-labor adjustment. Operating EBITDA should therefore be reviewed separately from cash available after interest and principal.
What should a U.S. buyer verify before relying on this range?
A buyer should replace the broad benchmark with property-level evidence. The 2026 FDD states that written substantiation for Item 19 data is available on reasonable request, while Item 20 and the outlet exhibits identify current and former franchisees. The most decision-useful work is to reconcile actual hotel P&Ls to the FDD definitions and the proposed property's capital structure.
- Request Item 19 written substantiation and confirm the exact STR Included Hotel eligibility rules, country mix, and treatment of missing reporting days.
- Ask comparable U.S. franchisees for room revenue, total revenue, GOP, EBITDA, management fees, franchise fees, replacement reserves, and owner distributions for at least three years.
- Reconcile Item 6 charges to actual invoices, including Franchise Fees, Program Services, Marriott Bonvoy, Account Sales, reservation/distribution, technology, and required programs.
- Obtain a market study with local competitive-set ADR, occupancy, RevPAR, seasonality, group demand, and supply pipeline.
- Price the approved general manager or management-company structure, including bonuses, benefits, base fees, incentive fees, and shared overhead.
- Model interest, principal, property taxes, insurance, furniture-fixture-equipment reserves, property-improvement obligations, and planned renovations separately from operating EBITDA.
The strongest defensible range is $4.70 million to $6.49 million of estimated annual hotel-level EBITDA for a modeled 250-room U.S. Sheraton, with a base estimate of $5.41 million. It is scenario-based, not an official Item 19 owner-earnings figure. RevPAR is the most important operating driver in the model; the largest unresolved uncertainty is whether the broad U.S. hotel EBITDA benchmark matches a specific Sheraton's full-service cost structure and recurring fee burden. A buyer should verify the Item 19 substantiation, obtain comparable franchisee P&Ls, and separate management labor, debt service, capital expenditures, and personal taxes before estimating actual annual distributions.