The median franchise cost is 11.8 percent of rooms revenue, according to the 2014 United States Hotel Franchise Fee Guide from HVS. Franchise fees for full-service brands were mostly above the median franchise cost, while extended-stay brands were largely below the median. The 10 highest franchise costs represented a mix of chain scales and product types, while the 10 lowest cost franchises were primarily economy properties. The Best Western brands were the lowest because they don’t charge any royalty or marketing fees. In general, most of the franchisee fees paid by a hotel are based on rooms revenue and are highly variable. However, since reservation fees vary by channel, a change in the source of reservations may have a significant impact on the ratio of franchisee fees as a percentage of rooms revenue. Focusing on the origins of one’s hotel reservations is the most productive way to reduce one’s franchise costs, the report states. Read more over at HVS.
