Marriott International Franchise Cost & Fees

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Description

Marriott International is the world’s largest travel company, offering unmatched choice for guests and driving unrivaled value for owners. With our expansive portfolio of brands, dynamic sales and marketing platform, and a global scale that drives efficiencies, our owners benefit from a clear competitive advantage and opportunity to maximize each hotel investment.Marriott is the largest hotel and resort chain in the world in terms of both number of units and annual revenue. Marriott currently operates under 18 hotel expressions in 57 countries, including Courtyard (#26), the Ritz-Carlton and SpringHill Suites. Its brands run across the spectrum of price, and range from traditional hotels to extended stay concepts.

 

Year Business Began: 1967

Franchising Since: 1967

Headquarters: Bethesda, MarylandEstimated

Number of Units: 6,520

Franchise Description: Marriott International, Inc. is the franchisor. The franchisor is a worldwide operator and franchisor of hotels and related lodging facilities. Marriott hotels are full-service hotels that cater to business and leisure travelers. The hotels range in size from approximately 100 to 2,000 guestrooms with a full-time hotel staff ranging from 100 to 3,000 associates. The hotels offer a variety of food and beverage options, including one or more restaurants and lounges, room service, catering, and banquet services. The franchisor’s brands cater to a broad spectrum of customers, and include luxury and upper-upscale full-service hotels, lifestyle hotels, extended-stay hotels, and select-service hotels. The company’s 30 brands include: Bulgari, The Ritz-Carlton and The Ritz-Carlton Reserve, St. Regis, W, EDITION, JW Marriott, The Luxury Collection, Marriott Hotels, Westin, Le Méridien, Renaissance Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments, Marriott Vacation Club, Autograph Collection Hotels, Tribute Portfolio, Design Hotels, Gaylord Hotels, Courtyard, Four Points by Sheraton, SpringHill Suites, Fairfield Inn & Suites, Residence Inn, TownePlace Suites, AC Hotels by Marriott, Aloft, Element, Moxy Hotels, and Protea Hotels by Marriott.

Training Overview: The franchisor requires that personnel at a franchisee’s hotel complete the required training within a designated time period. All training must be completed to the franchisor’s satisfaction and verification of successful completion must be presented upon the franchisor’s request. “Web-based” training is self-paced training that trainees can access at any time on the Internet. “Market-based” training is conducted at various locations throughout the country depending on the need and availability of trainees. Course schedules are communicated in advance allowing sufficient time for training to be completed within the required timeframe. The franchisor may provide other training to franchisees at no charge, and not as a part of the pre-opening team, if the franchisor decides that it is necessary. During years in which the franchisor holds an educational General Managers Conference, the general manager of the hotel will be required to attend. The franchisor also has numerous leadership training programs that are held at different locations throughout the year and are available to franchisees on an optional basis.Territory Granted: The franchise agreeement will permit franchisees to operate one hotel of a specific size at a specific site selected by the franchisee and approved by the franchisor. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, leases, manages, licenses, or franchises, or from other channels of distribution or competitive brands that the franchisor controls.Obligations and Restrictions: The franchisor requires franchisees to operate the hotel or to hire a management company consented to by the franchisor. A general manager who has successfully completed the training program must directly supervise the business on the premises. The franchisor requires the general manager and other managers to devote full time to the management and operation of the hotel. If the franchisee is an entity and not an individual, the franchisor generally requires the principals of the entity to sign a guaranty of the franchisee’s obligations. Franchisees must offer all of the goods and services that the franchisor designates. Furthermore, franchisees may offer only those goods and services that the franchisor requires or specifically allows.Term of Agreement and Renewal: The length of the initial franchise term is 20 years. The franchise agreement is not renewable.Financial Assistance: Generally the franchisor does not offer direct or indirect financing for franchisedMarriott hotels or guarantee any financing, loans, or other obligations. However, from time to time, under very limited circumstances and at its sole discretion, the franchisor may offer for certain hotels credit support in the form of a contingent guaranty of a portion of a loan provided by a third-party lender, or it may make a mezzanine loan.

Investment Tables: Estimated Initial Investment Name of Fee Low High Initial Franchise Application Fee ($85,000 plus and additional 300 for each guestroom in excess of 275 guestrooms) $92,500 $92,500 Pre-Opening Training and Services $128,100 $194,500 Pre-Opening Revenue Management Support and Training $9,000 $14,200 Property Management System (PMS), Reservation System (MARSHA), and One Yield Systems and Training $200,000 $240,000 Other Systems and Training $84,000 $104,000 Market Feasibility Study $15,000 $25,000 Land Not determinable because of variables Building Permit, Tap, and Impact Fees Not determinable because of variables Building Construction (per guestroom) $169,000 $267,000 Kitchen and Laundry Equipment (per guestroom) $5,000 $6,100 Furniture and Fixtures (per guestroom) $23,300 $28,400 Technology Hardware & Software and Network Infrastructure (per guestroom) $2,800 $15,800 Operating Supplies (per guestroom) $5,400 $6,600 Professional Design Services (per guestroom) $8,500 $13,400 Insurance $95,000 $272,000 Start-Up Costs (per guestroom) $4,500 $7,500 Hard Cost Contingency (10% of hard costs) Not determinable because of variables Food Safety and Sanitation Compliance (assuming 7 people at $70 per kitchen manager and engineering leader with responsibility for kitchen equipment) $490 $490 Opening Advertising $100,000 $150,000 Additional Funds per guestroom (first 3 months) $3,000 $5,000 Estimated Total* $67,354,090 $105,312,590 *The estimated initial investment range is for a 300-Guestroom Marriott, excluding land and permit fees, and costs identified as not determinable. Investment estimates for other brands available in their respective FDDs. Other Fees Type of Fee Amount Franchise Fees 6% of gross room sales and 3% of gross food & beverage sales. Program Services ContributionAn amount equal to: 1.55% to 1.86% of gross room sales (which includes a contribution to the Marketing Fund of 1% of gross room sales); plus $50,000 to $60,000 per year; plus $450 to $540 per guestroom per year. Reservation System (MARSHA) Fees:Per RoomPer ReservationPer Transaction $2.50 per guestroom per monthFor reservations made using Marriott’s central reservation system: $4.24 per guestroom reserved for non-resort hotels and $4.34 per guestroom reserved for resort hotels$0.386 for each transaction that affects inventory at thehotel, such as creating a new reservation, canceling an existing reservation, modifying an existing reservation to add or delete room nights, and each transaction that changes the rate One Yield $0.0922 per MARSHA transaction (including each transaction that affects inventory at the hotel, such as creating a new reservation, canceling an existing reservation, modifying an existing reservation to add or delete room nights, and each transaction that changes the rate) Marketing Fund 1% of gross room sales. Guest Loyalty Program, currently Marriott RewardsCertain costs of the Marriott Rewards program are billed as follows: (i) 4.3% of the total guest folio, including an average room tax component, generated by guests earning Marriott Rewards points or miles, is charged to the hotel (the franchisor anticipates that this amount will be reduced to 4.2% of the total guest folio in the third quarter of 2018); and (ii) for a group event (involving at least 10 guestrooms) and/or a catering event arranged by a meeting planner or other individual earning Marriott Rewards points or miles for such event, 0.95% of the gross revenues generated by each such group or catering event, up to a maximum amount of $500 per event, is charged to the hotel. Revenue Management Remote Solutions $2,300 to $7,000 per month, plus a one-time set-up fee that ranges from $3,500 to $5,000 Cluster Revenue Management Varies. Area/Account Sales and Group Sales Varies. Area/Account Sales: Group Lead 6% of gross group room revenue (which is calculated by multiplying the number of rooms booked, reduced by 10% to account for slippage, by the average room rate in the group sales contract) for leads generated from an Area/Account Sales market other than the one in which the hotel participates. 10% of gross group room revenue (calculated as provided above) for hotels that do not participate in Area/Account Sales. In both cases, this fee will not exceed $30,000 per booking. MI LEAD 6% of gross group room revenue and gross event/catering revenue. This charge will not exceed $30,000 per booking. Business Transient (BT) Booking $108 to $258 per month, depending on the number of guestroom nights that are centrally reserved for the hotel through the Area/Account Sales organization during the immediately preceding calendar year. Area Reservation Sales Offices (ARSO) $6.38 per guestroom reserved for non-resort hotels, $7.07 per guestroom reserved for resort hotels not requesting optional specialized resort services discussed below, and $9.81 per guestroom reserved for resort hotels requesting optional services, such as proactive spa, golf and restaurant reservation services via a specialized resort team, subject, in any case, to annual true-up as provided in the ARSO Service Agreement. Optional group housing function and input services cost an additional $28.00 per hour. National Group Sales:Group LeadCatering LeadExtended-Stay Lead $2.60 per room night booked$105 per catering opportunity booked$2.60 per room night booked General Sales Agents: Group Lead $2.50 per room night booked. Cooperative Advertising and Marketing Initiatives Varies. Gift Cards Varies. Intermediary Payments and Centralized Travel Agent Commission (CTAC) Usage Varies QuickGroup Online Booking 6% of gross group room revenue (which is calculated by multiplying the number of rooms booked using QuickGroup, plus 6% of any event space rental, catering, and audio visual revenue. No adjustments are made for changes after the initial booking. Field Marketing $17,000 to $170,000 per year, depending on the services provided Transaction-Based Paid Search 9% of applicable gross room revenues, not to exceed $200 per stay. Property Management System (PMS) Support Fee $610 to $1,980 per month Point of Sale (POS) System $395.42 per month per hotel, plus $7.15 per month per POS workstation for software and support. Communication Support $106 to $1,246 per month Mobile Guest Services $1.45 per guestroom per month Consolidated Inventory (CI) and Total Yield (TY) (CI/TY) Room Transaction Charge $1.5228 per group room contracted each month (not reduced or increased based on group room changes) CI/TY Function Space Transaction Charge $0.0099 per square foot of function space contracted each month (not reduced or increased based on function space square footage changes) Empower Guest Experience Software License and Marriott Support $454 to $2,700 per year plus $3,000 per year for Marriott support Engage$600 per user per year E-mail Varies. Marriott Global Source $0.39 per guestroom per month OSCAR (MARSHA Guest History) $0.02 per transaction eFolio $0.05 per transaction. Security Keys $5.42 per month for each security key. Credit Card Processing and Tokenization $0.047 per settlement transaction, plus $29 to $49 per month for tokenization (based on number of credit card transaction settlements) Computer and Server Software and Support $8.20 per PC per month$22.75 per Apple computer per month$130 per server per month Event Technology Services Varies. Mobile Device Management $8.00 per device per month Meeting Services Application (MSA) $0.0104 per sq. ft. of meeting space per month. Meeting Imagined $1,090 to $7,800 per year, depending on the square footage of meeting space at the hotel. Mobile Key $8 to $12 per guestroom per year for software and support. Marriott Environmental Sustainability Hub (MESH)$324 per year Brand Standards Audit (BSA) Re-audit $1,300 – $3,250 per audit and re-audit. Red Zone $2,750 for Red Zone 2 under the franchisor’s quality assurance program and each increase in Red Zone status after Red Zone 2. There may be an additional charge of $2,500 at Red Zone 3 for an in-person meeting at the hotel if we deem it necessary or desirable. Food Safety Re-Inspection $500 per re-inspection. Fire Protection and Life Safety Re-Inspection (BSA-related) $500 per re-inspection. Fire Protection and Life Safety Audit) $2,500 per audit Property Improvement Plan (PIP) $20,000 (or $25,000 if the franchisee requests an expedited PIP to be completed within four weeks) PIP Additional Site Visit $4,000 per visit. PIP Non-Compliance Re- Inspection $10,000 per re-inspection Renovation Non-Compliance Re-Inspection $5,000 per non-compliant renovation, $10,000 per re-inspection Advisory Services Varies. Lender Comfort Letter Processing Fee $2,500 Prospectus Review Varies. Design/Construction Review Services Varies. Fire Protection and Life Safety Design Review Services Approximately $3,000, but the cost may increase depending on the complexity of the project. Fire Protection and Life Safety Inspection and Testing (and Design Review Services) Approximately $3,000 to $17,500 (which is based on the time needed for the testing and inspection, the size of the hotel and the complexity of its design, and may be higher in some cases) and the franchisee must reimburse the franchisor for its expenses for travel, lodging and meals. Optional services to review the franchisee’s design plans for compliance with the franchisor’s fire protection and life safety standards may also be offered by the franchisor to the franchisee at an additional cost. Post-Opening Authorization to Open (ATO) Work Inspection Varies. Expansion Varies. Expansion Opening Authorization $3,500 Post-Approval Owner Background Check $300 per entity/$100 per person.If additional enhanced due diligence is required, the cost ranges from approximately $400 to $5,600 per background check, depending on the country involved and whether an entity or person is being checked. Expedited turnaround is available at an additional cost. Operator Screen $5,000 Training Varies. Transfer The greater of $150,000 or $500 per guestroom Non-Compliance 1% of gross room sales per month Liquidated Damages Varies, based on a formula. Indemnification Varies Removal of Hotel from System $25,000 Construction/Conversion Extension $10,000 Other Company Brand Conversion Authorization Varies Global Recipe Database $1.00 per guestroom per year Best Rate Guarantee Non-Compliance $50 to $175 per violation (based on the number of violations each month) Guest Complaint Resolution$150 per late response to a guest complaint, $25 per complaint handled by the franchisor, and reimbursement of all costs incurred by it to resolve a complaint (including compensation paid by us to a guest) Accounting Audit The amount of the underpayment plus interest if an audit reveals an underpayment. Interest on Overdue Amounts Lesser of 18% per year or maximum interest rate permitted by law. Costs and Attorneys’ Fees Varies. mCredit Customer Credit Reference Reports $12 per report. American Hotel and Lodging Association (AH&LA) $3 per guestroom per year. Associate Discount Forms and Cards $80 to $85 per hotel per year. Associate Engagement Surveys $6.50 per associate per survey, plus an implementation fee of $5,000 to $10,000 (depending on the number of Company Brand Hotels in the portfolio) Franchisee Associate Job Postings $125 per Marriott.com job posting, or $145 per CareerBuilder.com job posting Brand Magazine (JWM Magazine) $0.50 – $0.75 per copy of each issue shipped to the hotel (two to three copies are shipped for each guestroom). GM Awards $300 to $1,500 per hotel. Franchise Operations Support Resources Varies; approximately $400 to $1,500 per day per employee, depending on the experience and area of expertise of the employee.

Disclaimer :The above information has been compiled from the FDD of Marriott International. Year of FDD: 2018

 

Other Fees
Type of Fee Amount
Franchise Fees 6% of gross room sales and 3% of gross food & beverage sales.
Program Services Contribution An amount equal to: 1.55% to 1.86% of gross room sales (which includes a contribution to the Marketing Fund of 1% of gross room sales); plus $50,000 to $60,000 per year; plus $450 to $540 per guestroom per year.
Reservation System (MARSHA) Fees:

Per Room

Per Reservation

Per Transaction

$2.50 per guestroom per monthFor reservations made using Marriott’s central reservation system: $4.24 per guestroom reserved for non-resort hotels and $4.34 per guestroom reserved for resort hotels

$0.386 for each transaction that affects inventory at the
hotel, such as creating a new reservation, canceling an existing reservation, modifying an existing reservation to add or delete room nights, and each transaction that changes the rate

One Yield $0.0922 per MARSHA transaction (including each transaction that affects inventory at the hotel, such as creating a new reservation, canceling an existing reservation, modifying an existing reservation to add or delete room nights, and each transaction that changes the rate)
Marketing Fund 1% of gross room sales.
Guest Loyalty Program, currently Marriott Rewards Certain costs of the Marriott Rewards program are billed as follows: (i) 4.3% of the total guest folio, including an average room tax component, generated by guests earning Marriott Rewards points or miles, is charged to the hotel (the franchisor anticipates that this amount will be reduced to 4.2% of the total guest folio in the third quarter of 2018); and (ii) for a group event (involving at least 10 guestrooms) and/or a catering event arranged by a meeting planner or other individual earning Marriott Rewards points or miles for such event, 0.95% of the gross revenues generated by each such group or catering event, up to a maximum amount of $500 per event, is charged to the hotel.
Revenue Management Remote Solutions $2,300 to $7,000 per month, plus a one-time set-up fee that ranges from $3,500 to $5,000
Cluster Revenue Management Varies.
Area/Account Sales and Group Sales Varies.
Area/Account Sales: Group Lead 6% of gross group room revenue (which is calculated by multiplying the number of rooms booked, reduced by 10% to account for slippage, by the average room rate in the group sales contract) for leads generated from an Area/Account Sales market other than the one in which the hotel participates.

10% of gross group room revenue (calculated as provided above) for hotels that do not participate in Area/Account Sales. In both cases, this fee will not exceed $30,000 per booking.

MI LEAD 6% of gross group room revenue and gross event/catering revenue. This charge will not exceed $30,000 per booking.
Business Transient (BT) Booking $108 to $258 per month, depending on the number of guestroom nights that are centrally reserved for the hotel through the Area/Account Sales organization during the immediately preceding calendar year.
Area Reservation Sales Offices (ARSO) $6.38 per guestroom reserved for non-resort hotels, $7.07 per guestroom reserved for resort hotels not requesting optional specialized resort services discussed below, and $9.81 per guestroom reserved for resort hotels requesting optional services, such as proactive spa, golf and restaurant reservation services via a specialized resort team, subject, in any case, to annual true-up as provided in the ARSO Service Agreement. Optional group housing function and input services cost an additional $28.00 per hour.
National Group Sales:

Group Lead

Catering Lead

Extended-Stay Lead

$2.60 per room night booked

$105 per catering opportunity booked

$2.60 per room night booked

General Sales Agents: Group Lead $2.50 per room night booked.
Cooperative Advertising and Marketing Initiatives Varies.
Gift Cards Varies.
Intermediary Payments and Centralized Travel Agent Commission (CTAC) Usage Varies
QuickGroup Online Booking 6% of gross group room revenue (which is calculated by multiplying the number of rooms booked using QuickGroup, plus 6% of any event space rental, catering, and audio visual revenue. No adjustments are made for changes after the initial booking.
Field Marketing $17,000 to $170,000 per year, depending on the services provided
Transaction-Based Paid Search 9% of applicable gross room revenues, not to exceed $200 per stay.
Property Management System (PMS) Support Fee $610 to $1,980 per month
Point of Sale (POS) System $395.42 per month per hotel, plus $7.15 per month per POS workstation for software and support.
Communication Support $106 to $1,246 per month
Mobile Guest Services $1.45 per guestroom per month
Consolidated Inventory (CI) and Total Yield (TY) (CI/TY) Room Transaction Charge $1.5228 per group room contracted each month (not reduced or increased based on group room changes)
CI/TY Function Space Transaction Charge $0.0099 per square foot of function space contracted each month (not reduced or increased based on function space square footage changes)
Empower Guest Experience Software License and Marriott Support $454 to $2,700 per year plus $3,000 per year for Marriott support
Engage $600 per user per year
E-mail Varies.
Marriott Global Source $0.39 per guestroom per month
OSCAR (MARSHA Guest History) $0.02 per transaction
eFolio $0.05 per transaction.
Security Keys $5.42 per month for each security key.
Credit Card Processing and Tokenization $0.047 per settlement transaction, plus $29 to $49 per month for tokenization (based on number of credit card transaction settlements)
Computer and Server Software and Support $8.20 per PC per month
$22.75 per Apple computer per month
$130 per server per month
Event Technology Services Varies.
Mobile Device Management $8.00 per device per month
Meeting Services Application (MSA) $0.0104 per sq. ft. of meeting space per month.
Meeting Imagined $1,090 to $7,800 per year, depending on the square footage of meeting space at the hotel.
Mobile Key $8 to $12 per guestroom per year for software and support.
Marriott Environmental Sustainability Hub (MESH) $324 per year
Brand Standards Audit (BSA) Re-audit $1,300 – $3,250 per audit and re-audit.
Red Zone $2,750 for Red Zone 2 under the franchisor’s quality assurance program and each increase in Red Zone status after Red Zone 2. There may be an additional charge of $2,500 at Red Zone 3 for an in-person meeting at the hotel if we deem it necessary or desirable.
Food Safety Re-Inspection $500 per re-inspection.
Fire Protection and Life Safety Re-Inspection (BSA-related) $500 per re-inspection.
Fire Protection and Life Safety Audit) $2,500 per audit
Property Improvement Plan (PIP) $20,000 (or $25,000 if the franchisee requests an expedited PIP to be completed within four weeks)
PIP Additional Site Visit $4,000 per visit.
PIP Non-Compliance Re- Inspection $10,000 per re-inspection
Renovation Non-Compliance Re-Inspection $5,000 per non-compliant renovation, $10,000 per re-inspection
Advisory Services Varies.
Lender Comfort Letter Processing Fee $2,500
Prospectus Review Varies.
Design/Construction Review Services Varies.
Fire Protection and Life Safety Design Review Services Approximately $3,000, but the cost may increase depending on the complexity of the project.
Fire Protection and Life Safety Inspection and Testing (and Design Review Services) Approximately $3,000 to $17,500 (which is based on the time needed for the testing and inspection, the size of the hotel and the complexity of its design, and may be higher in some cases) and the franchisee must reimburse the franchisor for its expenses for travel, lodging and meals. Optional services to review the franchisee’s design plans for compliance with the franchisor’s fire protection and life safety standards may also be offered by the franchisor to the franchisee at an additional cost.
Post-Opening Authorization to Open (ATO) Work Inspection Varies.
Expansion Varies.
Expansion Opening Authorization $3,500
Post-Approval Owner Background Check $300 per entity/$100 per person.
If additional enhanced due diligence is required, the cost ranges from approximately $400 to $5,600 per background check, depending on the country involved and whether an entity or person is being checked. Expedited turnaround is available at an additional cost.
Operator Screen $5,000
Training Varies.
Transfer The greater of $150,000 or $500 per guestroom
Non-Compliance 1% of gross room sales per month
Liquidated Damages Varies, based on a formula.
Indemnification Varies
Removal of Hotel from System $25,000
Construction/Conversion Extension $10,000
Other Company Brand Conversion Authorization Varies
Global Recipe Database $1.00 per guestroom per year
Best Rate Guarantee Non-Compliance $50 to $175 per violation (based on the number of violations each month)
Guest Complaint Resolution $150 per late response to a guest complaint, $25 per complaint handled by the franchisor, and reimbursement of all costs incurred by it to resolve a complaint (including compensation paid by us to a guest)
Accounting Audit The amount of the underpayment plus interest if an audit reveals an underpayment.
Interest on Overdue Amounts Lesser of 18% per year or maximum interest rate permitted by law.
Costs and Attorneys’ Fees Varies.
mCredit Customer Credit Reference Reports $12 per report.
American Hotel and Lodging Association (AH&LA) $3 per guestroom per year.
Associate Discount Forms and Cards $80 to $85 per hotel per year.
Associate Engagement Surveys $6.50 per associate per survey, plus an implementation fee of $5,000 to $10,000 (depending on the number of Company Brand Hotels in the portfolio)
Franchisee Associate Job Postings $125 per Marriott.com job posting, or $145 per CareerBuilder.com job posting
Brand Magazine (JWM Magazine) $0.50 – $0.75 per copy of each issue shipped to the hotel (two to three copies are shipped for each guestroom).
GM Awards $300 to $1,500 per hotel.
Franchise Operations Support Resources Varies; approximately $400 to $1,500 per day per employee, depending on the experience and area of expertise of the employee.