How Much Does a Tapestry Collection Franchise Owner Make?

Officially, Item 19 discloses no revenue or earnings result for a Tapestry Collection franchise. For the 2026 U.S. offer and all Tapestry hotel formats covered by the document, Hilton Franchise Holding LLC states that it does not make representations about past outlet performance or a franchisee’s future financial performance.

That means no official average unit volume, median Gross Rooms Revenue, operating profit, Hotel EBITDA, Net Income, Cash Flow, owner salary, draw, or distribution can be attributed to the brand. Source: 2026 U.S. Tapestry FDD, Item 19, pp. 91–92. The Federal Trade Commission’s franchise guidance explains that Item 19 is optional, but any financial performance claim that is made must have a reasonable basis and written substantiation.

What does Item 20 add to the evidence?

Item 20 confirms a growing, entirely franchised U.S. population, but it does not provide a performance sample. At December 31, 2025, the FDD reported 143 franchised hotels and zero company-owned hotels; during 2025 it recorded 30 openings and four terminations or non-renewals. These figures describe system population and movement, not sales or profitability. Source: 2026 U.S. Tapestry FDD, Item 20, pp. 92–98.

The range is estimated by combining a 125-room FDD prototype with Hilton’s 2025 U.S. RevPAR, an SEC-derived full-service ancillary-revenue factor, and a 7.5% to 13.5% Hotel EBITDA margin band. It applies to one stabilized, manager-run U.S. hotel and is not a forecast for a new opening, conversion ramp, or specific market.

The revenue anchor comes from Hilton Worldwide Holdings’ 2025 Form 10-K, which reports 2025 U.S. systemwide comparable occupancy of 72.0%, ADR of $169.28, and RevPAR of $121.91 across Hilton brands. Because Tapestry has no Item 19 revenue figure, the model applies an explicit 80% / 100% / 120% spread around that central room-revenue proxy.

The operating benchmark comes from a December 2025 SEC-filed Service Properties Trust presentation. Its 47 retained full-service hotels reported $892.4 million of operating revenue, 14,860 rooms, $114.45 RevPAR, and a 10.5% Hotel EBITDA margin for the trailing 12 months ended September 30, 2025. The same filing’s reconciliation shows hotel operating expenses including management fees, real estate taxes, insurance, and FF&E reserves. The portfolio is not Tapestry Collection and contains different brands, markets, sizes, and asset conditions.

The 2026 FDD’s two base percentage fees equal 9% of Gross Rooms Revenue: a 5% Monthly Royalty Fee and a 4% Monthly Program Fee. On the three room-revenue scenarios, those two fees alone equal about $400,000, $501,000, and $601,000 per year. These are official FDD rates applied to estimated annual room revenue.

The scenario margin is treated as an all-in operating proxy, so the 9% fee load is not subtracted again after applying the margin. That avoids a potential double charge. However, the external portfolio does not publish a Tapestry-equivalent line-item match for royalty, program, loyalty, distribution, and technology costs. This is a major reason the confidence rating is Limited.

Other FDD charges may also affect a hotel’s result. Examples include OnQ connectivity and maintenance, Connected Room support, Hilton Honors charges, booking-channel fees, training, quality-assurance charges, RMCC services, and optional sales programs. Their annual amounts depend on room count, users, guest mix, distribution channels, compliance, and selected services, so they are not reduced to one unsupported percentage. Source: 2026 U.S. Tapestry FDD, Item 6, pp. 22–35.

Potentially, but only by the value of management labor actually replaced—not by converting the whole operating profit into “salary.” For the 2025 U.S. period, an owner who is approved to manage the hotel and genuinely removes a paid lodging-manager cost could add about $69,240 of labor value to the manager-run scenarios. That produces an estimated owner-operator benefit of about $549,000 to $1.36 million.

Item 15 requires qualified and experienced management. A hotel may be operated directly by the franchisee or by a Hilton-approved third-party management company. Direct management requires prior written approval and successful completion of training unless waived; Hilton can require an approved Management Company if it concludes the owner is not qualified. Source: 2026 U.S. Tapestry FDD, Item 15, pp. 73–75.

The labor value uses the U.S. Bureau of Labor Statistics May 2025 national median wage for lodging managers, approximately $69,240. It is a national occupation benchmark, not a Tapestry payroll disclosure. A large full-service hotel may need a general manager plus department heads, and an outside management-company fee may remain even when an owner is active. No addback is justified unless a real payroll or management charge disappears.

The largest unresolved uncertainty is Tapestry-specific revenue and expense dispersion because Item 19 supplies no comparable-hotel results. The range is estimated for a stabilized 125-room U.S. property; a ramping conversion, high-cost urban hotel, resort, food-and-beverage-heavy property, or heavily financed acquisition may fall materially outside it.

• Market and pricing: Occupancy and ADR determine RevPAR. The Hilton U.S. figure covers all Hilton brands, not the Tapestry Collection cohort.
• Property format: Tapestry hotels preserve individual design and local food-and-beverage concepts, so room count, service intensity, amenities, meeting space, and restaurant economics vary.
• Labor and management: A 24-hour hotel requires qualified management and multiple operating departments. Local wages and third-party management terms can shift the margin materially.
• Fee and channel mix: The 5% royalty and 4% program fee are only the base room-revenue charges. Loyalty, distribution, technology, and selected program costs vary with activity.
• Capital needs: Property-improvement plans, required system changes, renovations, and extraordinary replacement capital can reduce owner cash even when Hotel EBITDA is positive.
• Financing: Interest and principal are outside the operating range. A highly leveraged property can have little or no distributable cash after debt service.

Why is the confidence rating Limited?

The rating is Limited because the result relies materially on a Hilton all-brand revenue proxy and a non-Tapestry full-service Hotel EBITDA benchmark. The 2026 FDD verifies the legal entity, unit structure, fees, management obligations, and U.S. outlet population, but it does not verify the model’s RevPAR, ancillary-revenue factor, or margin for Tapestry hotels.

The U.S. Census Bureau classifies hotels and motels under NAICS 721110, but broad industry data cannot capture Tapestry’s property-level differences. Current industry commentary also indicates cost pressure: CBRE reported declining U.S. hotel GOP and EBITDA margins in 2023 and 2024 as expenses increased faster than revenue, with pressure expected to continue into 2025.

A buyer should replace every proxy with written property- and cohort-specific evidence before underwriting a Tapestry Collection transaction. The estimate is a screening range for one 125-room U.S. hotel, not a substitute for Item 19 substantiation, seller records, franchisee interviews, a market study, or a lender-ready operating model.

• Ask Hilton whether any current written Item 19 supplement, approved financial performance representation, or substantiation exists for comparable U.S. Tapestry hotels.
• Request monthly rooms revenue, food-and-beverage revenue, occupancy, ADR, RevPAR, departmental profit, management fees, franchise fees, real estate taxes, insurance, FF&E reserve, and Hotel EBITDA for the specific property.
• Separate stabilized hotels from new openings, conversions, renovations, temporary closures, and properties with materially different room counts or amenities.
• Interview current and former franchisees listed in Item 20 about management-company terms, loyalty and distribution charges, technology costs, labor intensity, PIP exposure, and owner distributions.
• Confirm whether the owner can be approved for direct management and identify the exact salary or management fee that would disappear; do not add a labor value without a real cost reduction.
• Model interest, principal, replacement capital, owner-level overhead, and taxes separately from Hotel EBITDA-like operating earnings.

The FTC’s consumer guide to buying a franchise explains why prospective franchisees should examine Item 19 and Item 20, consult professional advisers, and speak with current and former franchisees. Hilton’s official hotel development site and official Tapestry Collection brand page provide current brand and ownership context, but neither is a substitute for a financial performance representation.

The strongest defensible screening range is approximately $480,000 to $1.30 million in annual pre-tax, manager-run property operating benefit for a stabilized 125-room U.S. Tapestry Collection hotel, with a base scenario near $840,000. It is scenario-based, not official Item 19 earnings. The primary earnings driver is RevPAR combined with the hotel’s ability to convert total revenue into Hotel EBITDA after labor, management, franchise, distribution, occupancy, and property-level costs.

The largest uncertainty is the absence of Tapestry-specific sales and margin data. Owner involvement can add labor value only when the owner is approved, performs the management work, and removes a real cost; it does not transform business profit into salary. Debt service can materially reduce or eliminate distributable cash, and personal taxes cannot be estimated responsibly without the owner’s entity, jurisdiction, and tax facts.

Before making a decision, a buyer should verify the current Item 19 position, obtain any written substantiation Hilton is permitted to provide, reconcile the target property’s historical operating statements to the FDD fee schedule, and test the model through interviews with comparable current and former franchisees.