An 84-room U.S. Sleep Inn & Suites may generate roughly $290,000 to $550,000 in manager-run, hotel-level EBITDA before interest, depreciation, capital expenditures, debt service, and personal income taxes. The base scenario is approximately $410,000. These are independent estimates, not earnings figures reported by Choice Hotels International, Inc.
This range is an independent analytical scenario, not an Item 19 financial performance representation by the franchisor. It combines the 2026 Sleep Inn Franchise Disclosure Document’s RevPAR and fee disclosures with a separately identified U.S. hotel EBITDA benchmark and editorial sensitivity assumptions. Actual results can differ materially by location, hotel format, room count, occupancy, average daily rate, labor, insurance, property taxes, financing, owner involvement, physical condition, and execution.
What evidence supports this estimate?
Legal franchisor: Choice Hotels International, Inc. The applicable U.S. Franchise Disclosure Document was issued April 1, 2026 and amended May 20, 2026. Item 19, pages 75–78, reports occupancy, Average Daily Rate, Revenue Per Available Room, and reservation-channel contribution for franchised Sleep Inn and Sleep Inn & Suites hotels, but it does not report unit profit, EBITDA, net income, owner compensation, or cash flow.
Population: 402 open U.S. hotels at December 31, 2025, all franchised; 388 hotels qualified for the Performance Sample. Format used in the model: the 84-room Sleep Inn & Suites new-construction prototype described in Item 7, pages 41–45. Benchmark: CoStar/STR’s 2024 U.S. hotel P&L metrics. Owner-role wage: Bureau of Labor Statistics 2025 lodging-manager pay for the accommodation industry. Date checked: July 21, 2026.
No matching 2026 FDD hosted on an official franchise-controlled public domain was verified, so FDD references below are presented in plain text by year, Item, and page rather than linked.
2025 average for the 388-hotel Performance Sample; revenue per available room, not profit.
$53.94 RevPAR × 84 rooms × 365 days, rounded after calculation.
2024 U.S. hotel EBITDA PAR divided by TRevPAR; not Sleep Inn-specific.
96.5% of open U.S. Sleep Inn and Sleep Inn & Suites hotels qualified.
5.5% royalty and 3.5% Marketing and Reservation Fee on Gross Room Revenues.
2025 annual mean wage in the U.S. accommodation industry; benefits are excluded.
What does Sleep Inn’s Item 19 actually measure?
Officially, Item 19 measures hotel demand and room-rate performance, not owner earnings. For the year ended December 31, 2025, the 388-hotel Performance Sample reported average occupancy of 57.0%, Average Daily Rate of $94.62, and RevPAR of $53.94. The corresponding medians were 56.8%, $91.32, and $50.99. These are results for franchised U.S. Sleep Inn and Sleep Inn & Suites hotels, not company-operated hotels.
The Performance Sample included hotels open and operating by January 1, 2025. It excluded hotels repositioned from another Choice brand during 2025, hotels missing at least 30 days of performance data, and hotels with an operational interruption exceeding 30 consecutive days. Item 19 also states that the disclosed figures do not include the operating costs needed to determine net income or profit. The franchisor offers written substantiation on request.
RevPAR is gross room revenue divided by available rooms. It does not deduct payroll, housekeeping supplies, breakfast, utilities, insurance, property taxes, franchise fees, channel commissions, repairs, management costs, or financing. A $53.94 RevPAR therefore cannot be presented as owner income.
- Modeled room revenue
- RevPAR multiplied by available room nights. It excludes non-room revenue and does not equal Gross Room Revenues in every circumstance.
- Hotel-level EBITDA proxy
- An estimate after normal hotel operating and ownership expenses, but before interest, income taxes, depreciation, and amortization.
- Manager-run owner earnings
- Residual hotel-level EBITDA after a normal manager cost is assumed within the industry margin proxy; debt service and capital spending remain excluded.
- Owner-operator benefit
- Manager-run residual plus the market value of management labor performed by a qualified owner. The added amount is compensation for work, not passive profit.
How is the annual earnings range calculated?
The estimate applies a transparent revenue spread and EBITDA-margin sensitivity to an 84-room prototype. It is a scenario calculation for a franchised Sleep Inn & Suites hotel, not a prediction or a franchisor-endorsed projection.
- Revenue anchor: the official $53.94 average RevPAR from the 2025 Performance Sample. Conservative and Upside use 80% and 120% of that figure, as analytical assumptions rather than FDD-reported percentiles.
- Room count: 84 rooms, matching the new-construction prototype used in the 2026 FDD Item 7 investment table. The actual Performance Sample includes different room counts.
- Margin anchor: CoStar/STR reported 2024 U.S. hotel TRevPAR of $209.67 and EBITDA PAR of $51.88, implying a 24.74% EBITDA margin. Conservative and Upside vary that benchmark by minus or plus 3 percentage points.
- Fee treatment: the hotel-industry EBITDA proxy is treated as an all-in margin through EBITDA. The 5.5% royalty and 3.5% Marketing and Reservation Fee are therefore not deducted a second time. Exact Sleep Inn-specific channel, loyalty, technology, insurance, tax, and management costs may differ from the benchmark sample.
- Excluded from the result: interest, loan principal, depreciation, amortization, personal income taxes, owner distributions policy, and capital expenditures or renovation reserves.
| Scenario | RevPAR anchor | Modeled annual room revenue | EBITDA margin proxy | Estimated manager-run owner earnings |
|---|---|---|---|---|
| Conservative | $43.15 | $1,323,000 | 21.7% | $288,000 |
| Base | $53.94 | $1,654,000 | 24.7% | $409,000 |
| Upside | $64.73 | $1,985,000 | 27.7% | $551,000 |
Estimated annual hotel-level EBITDA before debt service, capital expenditures, and personal taxes.
Interpretation: revenue and margin move together in this sensitivity model, so the range should not be read as a probability distribution or as minimum and maximum outcomes.
Source and method: 2026 Sleep Inn FDD, Item 7 pages 41–45 and Item 19 pages 75–78; CoStar/STR 2024 U.S. hotel profit metrics. Values are rounded to the nearest $1,000.
How does owner involvement change the result?
Sleep Inn does not require the owner to operate the hotel personally, but it does require a certified General Manager. Under Item 15, page 70, a manager-run hotel can therefore be structurally valid. An active owner changes the economics only if the owner is qualified and actually performs work that would otherwise require paid management.
The Bureau of Labor Statistics reports a 2025 annual mean wage of $77,120 for lodging managers employed in the accommodation industry. Adding that wage to manager-run residual profit produces an estimated owner-operator benefit of approximately $365,000 to $628,000. This addition represents labor value, not additional passive business profit, and it excludes payroll taxes and employee benefits.
The teal gap is the $77,120 market value of management labor performed by the owner.
Interpretation: active ownership does not automatically improve hotel operating profit. The incremental amount is compensation for replacing a paid lodging manager while satisfying the franchisor’s certification requirement.
Source and method: 2026 Sleep Inn FDD, Item 15 page 70; BLS Accommodation industry wage data, 2025. The wage is added without employer benefits or payroll burden.
An owner who supervises strategy but retains a paid General Manager should use the manager-run range. Only an owner who becomes the certified General Manager and replaces that payroll position should consider the higher owner-operator benefit—and should treat the added $77,120 as earned labor compensation.
Which franchise fees affect annual owner earnings?
The fixed percentage starting point is 9.0% of Gross Room Revenues, but it is not the complete annual franchise-related burden. The 2026 FDD Item 6, pages 28–41, requires a 5.5% royalty and a 3.5% Marketing and Reservation Fee. Rewards, distribution, technology, revenue-management, training, meeting, and compliance charges can add material cost depending on booking mix and operating choices.
| Recurring obligation | 2026 FDD amount | How it affects the model |
|---|---|---|
| Royalty Fee | 5.5% of preceding month’s Gross Room Revenues | Core percentage expense; approximately $90,959 at the base modeled room revenue if definitions aligned exactly. |
| Marketing and Reservation Fee | 3.5% of preceding month’s Gross Room Revenues | Core percentage expense; approximately $57,883 at the base modeled room revenue if definitions aligned exactly. |
| Rewards Program Fee | 4.5%–5.5% of room revenue generated by rewards members | Variable with loyalty-member revenue and enrollment performance; not applied to all room revenue. |
| Property Technology & Service Fee | $9.65 per room monthly, subject to a $625 minimum and $925 maximum | For 84 rooms, the stated room-based amount is $810.60 monthly before optional integrations. |
| ChoiceMAX | $235–$360 monthly | Mandatory revenue-management technology; may be bundled with optional ChoiceROCS. |
| Distribution and commissions | Transaction-specific amounts, including OTA, GDS, travel-agent, and program fees | Highly dependent on channel mix; this is one reason an industry EBITDA margin cannot replicate a Sleep Inn P&L precisely. |
The illustrative 9.0% dollar amounts use modeled room revenue as a directional base. The FDD definition of Gross Room Revenues includes certain meeting-room, banquet-room, no-show, cancellation, and insurance proceeds that are not captured by RevPAR, so the actual fee base can differ.
Why should the earnings range be treated cautiously?
Confidence is Limited because the strongest same-brand disclosure stops at RevPAR and the margin comes from a broad U.S. hotel benchmark. The range is useful for framing diligence, but it is not a substitute for a property-level operating statement, local labor schedule, tax bill, insurance quote, renovation plan, and financing model.
Which variables can move earnings most?
RevPAR, labor productivity, insurance, property tax, booking-channel cost, and debt are the principal swing factors. This is an estimated 2025 operating model for an 84-room franchised hotel. The FDD’s sample included many room counts, ages, markets, and physical conditions, while the CoStar/STR profitability benchmark covered the broader U.S. hotel industry.
- Local demand and pricing: the FDD sample’s RevPAR ranged from $19.14 to $135.34, demonstrating that market and property performance can vary far beyond the article’s 80%–120% modeling band.
- Labor: Choice requires a certified General Manager, and hotels also need front-desk, housekeeping, maintenance, breakfast, and sales coverage. CBRE’s 2025 operating-cost review identified labor and insurance as major margin pressures across U.S. hotels.
- Property costs: EBITDA can be reduced by real estate taxes, insurance, management fees, repairs, and required brand work. The article excludes capital expenditures and renovation reserves.
- Financing: interestand principal are not deducted. A heavily financed hotel can distribute substantially less cash than its EBITDA proxy suggests.
- Cohort differences: the FDD’s 62-hotel new-construction-since-2016 cohort reported average RevPAR of $65.07, above the full-sample $53.94, but it is a different subset and should not be treated as a guaranteed new-hotel result.
What does Item 20 add to the risk picture?
Item 20 shows a system that declined from 410 to 402 franchised U.S. outlets during 2025. The table reports 11 openings, one non-renewal, and 18 outlets that ceased operations for other reasons, with no company-owned Sleep Inn outlets. This does not prove why any specific property left, but it reinforces the need to interview both current and former franchisees rather than relying on a system average.
The 388-hotel Performance Sample is broad, but it excludes certain interrupted, repositioned, and incomplete-data hotels. Item 19 also notes one Sleep Inn or Sleep Inn & Suites hotel closed during 2025 after operating for less than one year. A new buyer should review the complete exclusion list and request written substantiation.
What should a buyer verify before relying on this estimate?
A buyer should replace every broad assumption with market-specific evidence before using the range in a financing or acquisition decision. The FTC explains that Item 19 claims must disclose their basis and limitations and that a prospective franchisee may request written substantiation.
- Request the Item 19 written substantiation and confirm room counts, hotel ages, markets, renovation status, and the exact hotels behind the 388-property Performance Sample.
- Ask current franchisees for trailing-12-month room revenue, other revenue, payroll, franchise and loyalty fees, OTA and GDS commissions, utilities, insurance, property taxes, repairs, management fees, and EBITDA.
- Interview former franchisees listed in Item 20 about closures, non-renewal, conversion, required property improvements, staffing pressure, and lender outcomes.
- Separate the owner’s salary or management labor from business profit, and confirm whether the owner can complete Choice Hotels Certified General Manager requirements for the proposed property.
- Build debt service separately using the actual loan amount, interest rate, amortization, maturity, reserves, and lender covenants. Do not use EBITDA as spendable cash.
- Obtain a current property-condition assessment and a schedule for required furniture, fixtures, equipment, technology, and brand-standard work.
What is the strongest defensible earnings view?
The strongest defensible range is approximately $290,000 to $550,000 in annual manager-run, hotel-level EBITDA for an 84-room Sleep Inn & Suites, with a base scenario near $410,000. It is scenario-based, not an official owner-earnings disclosure. If a qualified owner replaces the certified General Manager, total owner-operator benefit may rise to roughly $365,000–$628,000, but the added amount is compensation for management labor.
The most important earnings driver is RevPAR because small changes in occupancy and Average Daily Rate flow through every available room night. The largest unresolved uncertainty is the absence of a same-brand property-level expense or profit disclosure. Before proceeding, a buyer should verify Item 19 substantiation, reconstruct several current franchisee P&Ls, review Item 20 exits, and test the exact property’s debt, capital, labor, insurance, tax, and booking-channel costs.