Embassy Suites Hotels by Hilton Franchise Opportunities - History

The first Embassy Suites opened in Kansas in 1984, as a brand underneath the Holiday Corporation. In 1999, the operating company merged with Hilton, making Embassy Suites a subsidiary of the Hilton Hotel company. The all-suite hotel expanded across North and South America over the following years and now has approximately 250 locations, over 80% of which are franchised.

What Does An Embassy Suites Hotels Franchise Cost? 

Initial Investment

Constructing and opening a standard 174-suite Embassy Suites hotel franchise, excluding real estate costs, insurance costs, and certain other items, requires an investment of $17,380,700 to $74,956,150.

Franchise Application Fees

All potential Embassy Suites franchisees are required to pay a franchise application fee of $75,000 + an additional $400 for each hotel suite over 250 if applying to open a new hotel or convert an existing property into an Embassy Suites. For a change of ownership application, the application fee is $175,000. These application fees are refundable, less a $7,500 processing charge.

For potential franchisees seeking to convert an existing property into an Embassy Suites Hotel or to change ownership of an existing Embassy Suites property, the franchisor requires an additional $7,500 PIP (product improvement plan) inspection fee that is not refundable. The PIP is a plan the franchisor assembles that instructs the franchisee on any steps that must be taken to bring the property in question up to Embassy Suites Hotels' brand standard before opening or reopening.

The franchisor reserves the right to waive, reduce, or modify these fees at its discretion, and may do so to incentivize development.

Eforea spa

Embassy Suites Hotels franchisees may have the option (or may be required) to add a spa to their hotel. Franchisees can choose Hilton's Eforea spa or may install another spa system of their choosing, so long as it meets the franchisor's design, build, and management requirements. To install an Eforea spa in their hotel, franchisees must pay an initial $25,000 fee and execute the Spa Amendment.

Ongoing Royalties and Program Contributions

Embassy Suites charges franchisees an ongoing monthly royalty fee on gross rooms revenue, as follows:

• New Development or Conversion Hotel: 3.5% of Gross Rooms Revenue during 1st year of operation; 4.5% of Gross Rooms Revenue during 2nd year of operation; and 5.5% of Gross Rooms Revenue for the remainder of the Term
• Ownership Change or Re-Licensing Hotel: 5.5% of Gross Rooms Revenue
• Eforea Spa: 2% of Gross Spa Revenue

In addition, the franchisor charges an ongoing monthly program fee of 4% of Gross Rooms Revenue (though this fee may be reduced to as low as 3.5% at the franchisor's discretion). 

Embassy Suites Hotels Franchise System Size and Composition

As of year-end 2018, there were about 245 Embassy Suites Hotels worldwide, around split 237 U.S. and 8 international. Around 81% of the locations are franchised, while 29% are corporate-owned. Systemwide, the franchise generates an estimated $2.6 billion in global sales.

Embassy Suites is a subsidiary of parent company Hilton Worldwide Holdings Inc.'s hotel portfolio. Other chains in the Hilton family include brands such as DoubleTree, Hilton Garden Inn, Hilton Hotels & Resorts, Homewood Suites, Home2Suites, Hampton, Waldorf Astoria, and others.