What Are Operating Procedures of Embassy Suites Franchise
Ever wondered how to become a part of a well-established hotel brand like Embassy Suites? Understanding the franchise model is key to unlocking this opportunity. Discover the investment, operational requirements, and support systems that make this a sought-after venture, and explore how our Embassy Suites Franchise Business Plan Template can guide your path to success.
| # | Operating Procedure | Description |
|---|---|---|
| 1 | Brand Standards Adherence | Franchisees must operate the hotel 24/7, strictly following all Embassy Suites brand standards and Hilton's operational manuals. This encompasses everything from guest service protocols to property maintenance and appearance. |
| 2 | Loyalty Program Integration | Mandatory participation in the Hilton Honors loyalty program is crucial for driving repeat business and guest engagement. This program is a cornerstone of the brand's appeal to both business and leisure travelers. |
| 3 | Marketing and Reservation Systems | Franchisees are required to participate in all national and regional marketing programs and utilize the mandated property management and reservation systems. These systems are integral to maintaining brand-wide consistency and operational efficiency. |
| 4 | Financial Reporting | Detailed monthly financial statements and operational reports must be submitted to Hilton within a specified timeframe, typically 15 to 20 days after the month's end. Timely and accurate reporting is essential for monitoring performance and compliance. |
| 5 | Fee Payment | All ongoing fees, including royalty and program fees, must be paid electronically on a monthly basis. Late payments are subject to interest and penalties as stipulated in the franchise agreement. |
| 6 | Capital Reserves | Franchisees are obligated to maintain a capital reserve fund, generally funded by 4-5% of total gross revenue annually. This ensures sufficient capital is available for necessary property improvements and renovations to uphold brand standards. |
| 7 | Quality Assurance Audits | Regular quality assurance audits are conducted by Hilton to ensure ongoing compliance with brand standards. Failure to meet required scores can result in default notices and may necessitate the implementation of a performance improvement plan. |
Key Takeaways
- The Embassy Suites franchise operates as an upscale, all-suite hotel model, distinguishing itself with complimentary cooked-to-order breakfast and evening receptions, which contribute to higher Average Daily Rates (ADR) and occupancy rates averaging between 73% and 77%.
- The total initial investment for a new Embassy Suites hotel can range from approximately $17.9 million to $85.7 million, with construction and FF&E being the largest cost components. Conversion projects may have lower investment requirements.
- Prospective franchisees must meet substantial financial qualifications, including a minimum liquid capital requirement of $300,000 to $1.5 million and a net worth of at least $5.7 million.
- Ongoing fees include an initial franchise fee of $75,000, a royalty fee of 3.50% of gross rooms revenue, and a marketing fee of 4% of gross rooms revenue.
- Hilton provides comprehensive support to franchisees, including access to the Hilton Honors loyalty program (over 190 million members), a global reservation system, national marketing campaigns, and revenue management services.
- The franchise agreement typically has a term of 22 years for new construction, with protected territories defined by specific geographic boundaries or radii.
- The average annual revenue per Embassy Suites unit is around $4.2 million, with a projected breakeven time of 24 months and an investment payback period of 36 months.
What Is the Embassy Suites Franchise Business Model?
What defines the Embassy Suites hotel franchise model?
The Embassy Suites by Hilton franchise model is built around an all-suite, upscale hotel experience. This approach aims to deliver a premium guest stay by offering complimentary amenities like cooked-to-order breakfast and evening receptions. These features are designed to drive higher Average Daily Rates (ADR), setting the brand apart within the Hilton portfolio. The brand's dual appeal to both business and leisure travelers contributes to strong occupancy rates. As of early 2025, projections indicate an average occupancy rate between 73% and 77% nationwide, aligning with top-performing upscale hotel segments. A key aspect of the Embassy Suites franchise model is its adherence to specific physical layouts, including the signature atrium, ensuring brand consistency across all locations. Prospective franchisees must comply with these brand standards, as detailed in the Franchise Disclosure Document (FDD).
How does Hilton support this franchise opportunity?
As a premier Hilton franchise opportunity, the Embassy Suites franchise grants franchisees access to the extensive Hilton Honors loyalty program, which boasts over 190 million members as of Q1 2025. This program is a significant driver of direct bookings. Hilton provides comprehensive support services tailored for Embassy Suites franchise owners. These services include a global reservation system, national marketing campaigns, and sophisticated revenue management services designed to optimize pricing and occupancy, which can contribute to an estimated 10-15% of total bookings. Franchisees also benefit from Hilton's supply management program. This program offers negotiated pricing on furniture, fixtures, and equipment (FF&E) and operational supplies, potentially leading to a reduction in initial and ongoing operational costs by 5-8% compared to sourcing independently.
For those interested in the financial commitment, the initial investment for an Embassy Suites franchise can range from $17,954,895 to $85,698,315. The initial franchise fee is $75,000, with ongoing royalty fees at 3.50% and a marketing fee of 4%. Prospective franchisees must have a minimum of $300,000 to $1,500,000 in cash required and a net worth of at least $5,715,500. The average annual revenue per unit is approximately $4,195,000, with a median of $4,491,000. Many franchisees can expect to reach breakeven within 24 months, with investment payback occurring around 36 months. You can find more detailed information on the financial aspects by exploring How Much Does an Embassy Suites Franchise Cost?
Key Considerations for Aspiring Franchisees
- Understand the Brand Standards: Strict adherence to brand standards, including physical layouts and the signature atrium, is crucial for maintaining brand consistency and guest expectations.
- Leverage Hilton's Network: Take full advantage of the Hilton Honors loyalty program and the global reservation system to drive bookings and build a loyal customer base.
- Financial Preparedness: Ensure you meet the significant net worth and cash requirements, as well as understand the full initial investment and ongoing fees associated with the Embassy Suites franchise.
What Are The Embassy Suites Franchise Investment Requirements?
When considering an Embassy Suites franchise, understanding the financial commitment is paramount. The total initial investment for a new build of 250 suites can range significantly, from approximately $75 million to $140 million, not including land acquisition costs. This substantial figure encompasses the initial franchise fee, construction, furnishings, and other pre-opening expenses. For example, construction and building costs typically account for 60-70% of the total investment, with FF&E (Furniture, Fixtures, and Equipment) making up another 15-20%. Pre-opening expenses usually fall between 5-7%.
For those exploring conversion projects, the franchise investment requirements are generally lower. These can range from $150,000 to $250,000 per key, depending heavily on the existing property's condition and the necessary renovations to align with brand standards. These figures highlight the scale of investment required for this particular hotel franchise model.
What is the total initial investment?
The total initial investment for an Embassy Suites franchise varies based on whether it's a new build or a conversion. For a new construction project, the range is estimated between $75 million and $140 million for a 250-suite hotel. This includes the initial franchise fee, which is $75,000 according to recent Franchise Disclosure Documents (FDDs), along with significant capital for construction, FF&E, and pre-opening operational setup. The FDD also indicates a broader initial investment range of $17,954,895 to $85,698,315, which accounts for various factors influencing the total cost.
Conversion projects offer a different investment profile, with costs typically falling between $150,000 to $250,000 per key. This is a more accessible entry point for some investors, but it still requires substantial capital for renovations and bringing the property up to the brand's exacting standards.
What are the financial qualifications?
To become an Embassy Suites franchisee, prospective candidates must meet rigorous financial qualifications. The minimum liquid capital requirement is substantial, often estimated between $20 million and $30 million as of June 2025. This ensures that franchisees have the necessary readily available funds to cover initial startup costs and initial operating expenses. Furthermore, the net worth requirement is equally significant, typically ranging from $75 million to $100 million for new development projects. Recent FDD data suggests a net worth requirement of at least $5,715,500, which is a critical factor in assessing an applicant's financial stability and capacity to manage such a large-scale hospitality venture.
Hilton, the parent company, conducts a thorough financial review. This process involves scrutinizing financial statements, credit history, and overall business acumen to ensure the long-term success and viability of the Embassy Suites franchising partnership. Understanding these requirements is crucial for anyone looking into this Hilton franchise opportunity and is a key step in the Embassy Suites franchise application process.
Key Financial Considerations for Embassy Suites Franchisees
- Initial Investment: Be prepared for a significant upfront investment, ranging from $75 million to $140 million for new builds, or $150,000 to $250,000 per key for conversions.
- Liquid Capital: A minimum of $20 million to $30 million in liquid capital is generally required.
- Net Worth: A total net worth of $75 million to $100 million is typically expected for new developments, though FDDs may cite figures around $5.7 million.
- Ongoing Fees: Factor in royalty fees (3.50%) and marketing fees (4%) on gross revenues.
For a deeper dive into the specifics and to understand the full scope of owning a hotel franchise model like this, exploring detailed financial analyses is essential. Prospective franchisees should also consider the long-term profitability, with average annual revenues per unit around $4.2 million according to FDD data. This provides a benchmark for evaluating the potential return on investment. For those seeking to understand more about the operational and contractual aspects, reviewing the What are the Pros and Cons of Owning an Embassy Suites Franchise? can offer further insight.
What Are The Ongoing Fees And Agreements?
What are the Embassy Suites franchise fees and royalties?
When considering an Embassy Suites franchise, understanding the ongoing financial commitments is crucial. Franchisees are required to pay a continuing royalty fee, which is set at 3.50% of gross revenue. This fee is a standard component of most franchise agreements, granting you the right to leverage the established brand name and operational systems. In addition to the royalty, there is a marketing fee of 4% of gross revenue. This contribution supports system-wide advertising and marketing efforts, designed to drive customer traffic to all franchised locations.
The initial investment for an Embassy Suites franchise can range significantly, with low initial investment figures starting around $17,954,895 and going up to $85,698,315. This broad range reflects factors like location, size, and specific build-out requirements. A key part of the upfront cost is the initial franchise fee, which is $75,000. This fee is typically paid upon signing the franchise agreement and provides access to the brand's established business model and support systems. For a detailed breakdown of these initial costs, you can refer to How Much Does an Embassy Suites Franchise Cost?
What are the franchise agreement details?
The franchise agreement for an Embassy Suites hotel typically has a term of 22 years for new construction projects. It's important to note that there isn't an automatic right to renewal; any extension is subject to the franchisor's approval and the prevailing franchise terms at that time. This long-term commitment underscores the significant investment and strategic planning required for a successful hotel franchise operation.
A critical aspect of the franchise agreement is the definition of a protected territory. This usually outlines specific geographic boundaries or a defined radius, ensuring that another Embassy Suites location does not open within that area during your term. This territorial protection is vital for managing competition and ensuring the viability of your investment. Furthermore, the franchise disclosure document (FDD) provides a comprehensive overview of key terms, including your obligations as a franchisee, the services provided by the franchisor, termination clauses, and conditions for transferring the franchise. It is highly recommended to have legal counsel review these documents thoroughly before signing.
Key Considerations for the Franchise Agreement
- Review the Term Length: Understand the full duration of the agreement and the process for renewal.
- Clarify Territorial Rights: Ensure the protected territory is clearly defined and sufficient for your business goals.
- Seek Legal Counsel: Always have an experienced franchise attorney review the entire Franchise Disclosure Document (FDD) and the franchise agreement before signing.
Operating Procedure To Apply For An Embassy Suites Franchise
What is the franchise application process?
Embarking on the journey to open an Embassy Suites hotel involves a structured application process designed to ensure alignment between prospective franchisees and the Hilton brand. This begins with a thorough online inquiry submitted through the Hilton development website. Following this initial step, candidates are required to submit a comprehensive application package. This package is detailed and includes essential financial statements and a well-crafted business plan, giving Hilton a clear picture of your financial standing and strategic vision.
Once your initial submission is reviewed, qualified candidates will receive the Franchise Disclosure Document (FDD). This document is a cornerstone of the due diligence process for any prospective Embassy Suites franchisee. It provides critical insights into the operational requirements, financial obligations, and legal framework of the Embassy Suites franchising opportunity. Carefully reviewing the FDD is paramount to understanding the full scope of what's involved in becoming an Embassy Suites franchisee.
The culmination of the application process involves a series of interviews with Hilton's experienced development team. These discussions are designed to assess your suitability and commitment. Following successful interviews, the process moves to site selection approval, where Hilton ensures the proposed location meets their rigorous standards. The final step is the execution of the franchise agreement, a legally binding contract. This entire comprehensive process typically spans between 6 to 12 months, reflecting the significant investment and commitment required for an Embassy Suites franchise.
How do you get approved?
Gaining approval to operate an Embassy Suites franchise hinges on several key factors. A primary requirement is demonstrating substantial experience in the hospitality sector, particularly within the upscale or full-service hotel segment. This experience is vital, as it indicates a foundational understanding of hotel operations and guest services. Equally important are the stringent financial requirements. Prospective franchisees must meet specific net worth and liquidity benchmarks to ensure they have the financial capacity to support such a significant investment. The Franchise Disclosure Document (FDD) outlines these requirements in detail, including a stated net worth requirement of $5,715,500.
A critical element of the approval process is the evaluation of the proposed market and specific site for the new hotel. Hilton conducts its own in-depth market analysis to confirm that the chosen location can effectively support an Embassy Suites hotel. This analysis also aims to prevent any negative impact on existing Hilton-branded properties in the vicinity. This due diligence ensures that each new franchise contributes positively to the overall brand portfolio.
Furthermore, presenting a professional and meticulously prepared business plan is crucial. This plan should clearly articulate your management team's expertise, your proposed operational strategy, and realistic financial projections. A robust business plan demonstrates your capability and readiness to successfully operate an Embassy Suites franchise, showcasing your understanding of the market and your potential for profitability. For those looking to understand the investment further, the initial investment can range significantly, from $17,954,895 to $85,698,315, with a required cash investment between $300,000 and $1,500,000.
Tips for a Strong Franchise Application
- Demonstrate Relevant Experience: Highlight your background in hotel management or a related service industry.
- Financial Preparedness: Ensure your financial statements are up-to-date and clearly show you meet the net worth and liquidity requirements.
- Thorough Market Research: Provide evidence of strong market demand and a competitive advantage for your proposed hotel location.
- Detailed Business Plan: Craft a comprehensive plan that includes realistic financial projections and a clear operational strategy.
- Understand the FDD: Allocate sufficient time to thoroughly review the Franchise Disclosure Document and seek legal counsel if necessary.
| Initial Franchise Fee | $75,000 |
| Royalty Fee | 3.50% |
| Marketing Fee | 4% |
Understanding the financial commitments is key to preparing a successful application for an Embassy Suites franchise. The initial investment range, as mentioned, is substantial, reflecting the quality and operational scale of the brand. Beyond the initial fees, ongoing costs include royalty fees, which are set at 3.50% of gross revenue, and a marketing fee of 4%. These fees contribute to the brand's continued growth and marketing efforts, supporting all Embassy Suites franchisees. For those considering this path, understanding how to open an Embassy Suites hotel is a multi-faceted process that requires careful planning and execution.
Operating Procedure To Build An Embassy Suites Hotel
How do you select and develop a site?
When considering an Embassy Suites franchise, the initial step involves identifying and securing a prime location. This site needs to be in a market that demonstrates robust demand drivers. Think about areas with significant corporate presence, proximity to convention centers, or popular tourist destinations. While Hilton provides valuable market analysis support to help you understand these dynamics, the ultimate responsibility for site selection rests with you, the prospective franchisee.
Once you've pinpointed a potential site, it undergoes a formal review process by Hilton's development committee. This committee meticulously evaluates various factors, including the site's visibility, ease of access, and the competitive landscape in the local market. This approval is a crucial milestone in the process of how to open an Embassy Suites hotel.
The subsequent development phase requires collaboration with architects and designers who are approved by Hilton. They will be instrumental in crafting plans that align with the latest Embassy Suites prototype designs. As of 2025, these designs place a strong emphasis on creating flexible social spaces and incorporating sustainable building practices, reflecting a forward-thinking approach to hotel development.
What brand standards must be met?
The brand standards for an Embassy Suites franchise are comprehensive, dictating every facet of the hotel's design, construction, and overall outfitting. These standards are detailed and leave no room for ambiguity, covering everything from the iconic signature atrium to the specific layouts of the suites and the aesthetic of public areas.
Ensuring a consistent guest experience and brand integrity means that all Furniture, Fixtures, and Equipment (FF&E) must be sourced exclusively from vendors approved by Hilton. This rigorous sourcing ensures that the quality, durability, and visual consistency expected of the Embassy Suites brand are maintained across all properties.
Following construction, each new hotel must successfully pass a series of stringent inspections. These inspections are designed to verify 100% compliance with all brand standards. Only after successfully meeting these exacting requirements will the hotel be granted permission to open its doors and welcome guests under the Embassy Suites name.
Key Considerations for Site Development
- Market Demand: Prioritize locations with strong corporate, convention, or tourism traffic.
- Hilton Approval: Understand that site selection requires formal approval from Hilton's development committee.
- Prototype Adherence: Work with approved architects to ensure designs meet current brand prototypes, including flexible social spaces and sustainability.
For those exploring hotel franchise opportunities, understanding the financial commitments is paramount. The initial investment for an Embassy Suites franchise can range significantly, from $17,954,895 to $85,698,315. This broad range reflects the varying costs associated with different markets and site developments. The initial franchise fee is set at $75,000, with ongoing royalty fees at 3.50% of gross revenue and a marketing fee of 4%.
| Initial Investment Range | $17,954,895 - $85,698,315 |
| Initial Franchise Fee | $75,000 |
| Royalty Fee | 3.50% |
| Marketing Fee | 4% |
| Cash Required | $300,000 - $1,500,000 |
| Net Worth Requirement | $5,715,500 |
The financial performance of an Embassy Suites franchise can be substantial, with average annual revenues per unit reported at approximately $4,195,000, and a median of $4,491,000. While the lowest annual revenue reported is $1,000,000, the highest can reach up to $6,500,000. For aspiring franchisees, a breakeven point is typically anticipated around 24 months, with investment payback often occurring within 36 months.
| Average Annual Revenue | $4,195,000 |
| Median Annual Revenue | $4,491,000 |
| Breakeven Time | 24 Months |
| Investment Payback | 36 Months |
For those exploring different avenues within the hospitality sector, it's beneficial to understand the broader landscape. What Are Some Alternatives to the Embassy Suites Franchise? can offer valuable comparative insights.
Operating Procedure To Manage An Embassy Suites Franchise
What training is provided to franchisees?
When you decide to franchise Embassy Suites, comprehensive training is a cornerstone of the operational procedure. This isn't just a quick overview; it's a multi-week, mandatory program. Key personnel, including your General Manager and Director of Sales, are required to attend training sessions at a certified training hotel and then at Hilton's corporate headquarters. This ensures they are thoroughly versed in Hilton's proprietary operating systems, advanced revenue management tools, and effective sales techniques. Crucially, the training also emphasizes the unique service culture of the Embassy Suites brand, covering the specifics of managing popular amenities like the complimentary breakfast and evening reception. As of 2025, this commitment to training extends beyond the initial phase with extensive online modules and ongoing regional support, designed to keep your hotel staff proficient in brand standards and operational best practices throughout your franchise agreement.
What ongoing support is available?
The support for an Embassy Suites franchise doesn't end after training. Franchisees benefit from continuous support services designed to enhance operational efficiency and guest satisfaction. A dedicated Brand Performance Support team provides ongoing guidance, helping you to improve operational efficiency, boost guest satisfaction scores, and ultimately, increase profitability. Hilton equips franchisees with powerful, proprietary technology, most notably the OnQ property management system. This integrated system streamlines reservations, guest profiles, and hotel management functions into a single, user-friendly platform. Furthermore, for those focused on an Embassy Suites franchise profitability analysis, Hilton's revenue management experts offer regular consultations. These sessions are invaluable for optimizing pricing strategies and maximizing your RevPAR (Revenue Per Available Room), a critical metric in the hotel industry. In 2019, there were 226 franchised units, indicating a strong network that benefits from these robust support systems.
To understand the initial steps and requirements, you might find this resource helpful: How to Start an Embassy Suites Franchise in 7 Steps: Checklist.
Operational Tips for Franchisees
- Master the Brand Standards: Consistent adherence to Embassy Suites brand standards is crucial for guest experience and brand reputation.
- Leverage Technology: Fully utilize the OnQ system and other provided technologies for efficient operations and data analysis.
- Focus on Guest Service: The complimentary breakfast and evening reception are key differentiators; ensure these are executed flawlessly.
- Stay Informed on Revenue Management: Actively engage with Hilton's revenue management experts to optimize pricing and occupancy.
| Initial Investment Range: | $17,954,895 to $85,698,315 |
| Initial Franchise Fee: | $75,000 |
| Royalty Fee: | 3.50% |
| Marketing Fee: | 4% |
The average annual revenue per unit for an Embassy Suites franchise is approximately $4,195,000, with a median of $4,491,000. This highlights the significant revenue potential within this hotel franchise model. Franchisees typically see a breakeven time of around 24 months and an investment payback within 36 months, demonstrating a relatively quick return on investment compared to some other franchise opportunities.
Financial Management Insights
- Monitor Key Performance Indicators (KPIs): Regularly track RevPAR, occupancy rates, and guest satisfaction scores.
- Control Operating Expenses: While revenue is high, diligent management of expenses like utilities and labor is key to profitability.
- Understand P&L Statements: Familiarize yourself with the average P&L, noting that Cost of Goods Sold is typically 0% for this type of franchise, meaning gross profit is nearly equal to revenue.
| Cash Required: | $300,000 - $1,500,000 |
| Net Worth Requirement: | $5,715,500 |
| Franchised Units (2019): | 226 |
The franchise Embassy Suites model relies on a strong operational framework supported by Hilton. Understanding the franchise agreement details and the specific requirements to franchise Embassy Suites is paramount for prospective franchisees. This includes a thorough review of the Embassy Suites Franchise Disclosure Document (FDD) to grasp the full scope of the investment and operational obligations. For instance, the net worth requirement of $5,715,500 is a significant factor for potential investors considering this Hilton franchise opportunity.
Operating Procedure To Analyze Embassy Suites Franchise Profitability
Understanding the potential financial performance of an Embassy Suites franchise is crucial for any prospective franchisee. It requires a detailed look at revenue streams, operating costs, and key profitability metrics.
What is the average revenue?
The average revenue for an Embassy Suites franchise is influenced by several factors, including its specific location, the local market's economic health, and the effectiveness of its management. As of late 2024, projecting into 2025, the system-wide Average Daily Rate (ADR) is anticipated to fall between $185 and $210. Considering an average of 250 suites and aiming for a consistent occupancy rate of 75%, a well-managed property could realistically achieve annual gross rooms revenue ranging from $155 million to $183 million. Beyond room revenue, the complimentary breakfast and evening reception, along with catering and on-site restaurant sales, are significant contributors. These food and beverage operations can boost total revenue by an additional 15-20%.
What are the key profit margins?
For Embassy Suites properties, Gross Operating Profit (GOP) margins typically hover between 35% and 42%. This is a healthy range within the upscale hotel segment and is calculated before the deduction of management fees and other fixed charges. After all expenses are accounted for, including royalty fees, program fees, property taxes, and debt service, the Net Operating Income (NOI) margin is projected to be in the vicinity of 20% to 28%. Many successful Embassy Suites franchisees credit the robust Hilton Honors loyalty program and the brand's broad appeal to both business and leisure travelers as primary drivers for achieving strong profitability, evidenced by numerous franchise success stories.
| Financial Metric | Amount ($) | Percentage of Revenue (%) |
| Average Annual Revenue (from FDD data) | $4,195,000 | 100% |
| Gross Profit Margin (from FDD data) | $964,750 | 100% |
| EBITDA (from FDD data) | $964,346 | 100% |
| Expense Type | Annual Amount ($) |
| Guest Internet Access Service (Range) | $6,264 - $18,792 |
To gain a comprehensive understanding of how to open an Embassy Suites hotel, it's beneficial to review the detailed steps involved. You can find a comprehensive guide on How to Start an Embassy Suites Franchise in 7 Steps: Checklist.
Tips for Analyzing Profitability
- Location Analysis: Thoroughly research the demographic and competitive landscape of your target market. High-traffic areas and business hubs often correlate with higher ADR and occupancy rates.
- Cost Management: Focus on efficient operational management, particularly in food and beverage, to maintain healthy GOP margins.
- Leverage Brand Strength: Utilize the Hilton Honors program and national marketing efforts to drive consistent bookings and customer loyalty.
The initial investment for an Embassy Suites franchise can range significantly, from approximately $17,954,895 to over $85,698,315. This broad range reflects differences in property size, location, and renovation requirements. The initial franchise fee is $75,000, with ongoing royalty fees set at 3.50% and a marketing fee of 4% of gross revenue. Prospective franchisees should also be prepared with a minimum of $300,000 to $1,500,000 in liquid cash and a net worth of at least $5,715,500. Achieving breakeven is typically projected within 24 months, with a full investment payback anticipated around 36 months.
| Franchise Fee (Initial) | $75,000 |
| Royalty Fee | 3.50% |
| Marketing Fee | 4% |
| Net Worth Requirement | $5,715,500 |
| Cash Required | $300,000 - $1,500,000 |
Operating Procedure To Fulfill Franchisee Obligations
What are the operational requirements?
Operating an Embassy Suites franchise means adhering to a strict set of brand standards and operational protocols, ensuring a consistent guest experience. Franchisees are required to run their hotel 24 hours a day, 365 days a year. This continuous operation must be in strict compliance with all Embassy Suites brand standards for franchisees and Hilton's comprehensive operational manuals. This commitment extends to mandatory participation in all national and regional marketing programs. Furthermore, franchisees must actively engage in the Hilton Honors loyalty program and utilize the designated property management and reservation systems. To ensure these standards are met, Hilton conducts regular quality assurance audits. Failing to maintain the required scores during these audits can result in default notices and may necessitate the implementation of a performance improvement plan.
What are the reporting and financial duties?
Financial and reporting duties are critical for any Embassy Suites franchise owner. Franchisees are obligated to submit detailed monthly financial statements and operational reports to Hilton. These reports are typically due within 15 to 20 days of the month's end. All ongoing fees, including the 3.50% royalty fee and 4% program fee, must be paid electronically on a monthly basis. It's important to note that late payments will incur interest and penalties as stipulated in the franchise agreement. Additionally, franchisees are required to maintain a capital reserve fund. This fund is usually financed by 4-5% of total gross revenue annually, ensuring sufficient capital is available for necessary property improvements and renovations to uphold brand standards over time.
Key Franchisee Obligations for Embassy Suites
- Maintain 24/7/365 operations in strict adherence to brand standards.
- Participate in all national and regional marketing initiatives.
- Enroll and utilize the Hilton Honors loyalty program and required systems.
- Submit monthly financial and operational reports promptly.
- Ensure timely electronic payment of all fees, including royalties and program fees.
- Contribute to a capital reserve fund for ongoing property upkeep and renovations.
Understanding these operational and financial obligations is crucial for anyone considering an Embassy Suites franchise opportunity. The initial investment for an Embassy Suites franchise can range significantly, from $17,954,895 to $85,698,315, with a required cash investment of $300,000 - $1,500,000 and a net worth requirement of $5,715,500. The initial franchise fee is $75,000. For those aspiring to become an Embassy Suites franchisee, a thorough review of the franchise agreement details and the Embassy Suites franchise disclosure document overview is highly recommended.
| Financial Metric | Amount ($) | Percentage of Revenue (%) |
| Average Annual Revenue | $964,750 | 100% |
| Royalty Fee | N/A (Calculated on Revenue) | 3.50% |
| Marketing Fee | N/A (Calculated on Revenue) | 4% |
| Franchise Type | Average Annual Revenue per Unit | Median Annual Revenue per Unit |
| Embassy Suites Franchise | $4,195,000 | $4,491,000 |
The commitment to operational excellence is a cornerstone of the Embassy Suites franchising model. By understanding and fulfilling these obligations, franchisees can better navigate the path to owning and operating a successful hotel. For a deeper dive into the financial aspects and potential earnings, explore How Much Does an Embassy Suites Franchise Owner Make?