Franchise Costs: Detailed Estimates of Courtyard by Marriott Franchise Costs (2016 FDD)

Detailed Estimates of Courtyard by Marriott Franchise Costs Based on Item 7 (Estimated Initial Investment) of Courtyard by Marriott’s 2016 Franchise Disclosure Document

For 80 to 110 Guestrooms

1.  Initial Franchise Application Fee:  $75,000

2.  Pre-Opening Training and Services:  $36,450 to $65,300

3.  Pre-Opening Revenue Management Support:  $3,000

4.  Property Management System (“PMS”), Reservation System (“MARSHA”), One Yield, and Other Systems:  $51,000 to $76,500

• The estimate includes initial costs for MARSHA, PMS, One Yield, and the Simphony POS system from Oracle, and includes the $16,500 fee paid to the franchisor for planning and installation costs for PMS, MARSHA, and One Yield.

• POS system costs and PMS system costs are paid directly by you to the vendor. All other payments are made to the franchisor and remitted by the franchisor to the applicable vendor.

5.  Market Feasibility Study:  $10,000 to $25,000

• Generally, the franchisor does not provide assistance in site selection. The cost is for a market feasibility study by an independent, third-party consultant.

6.  Land:  Not determinable because of variables

• The franchisor does not estimate the cost of real estate or site work because of wide variations among geographic areas and sites.

• The prototypical plans assume that a Courtyard hotel of 80 to 110 guestrooms will require a minimum of 2 acres not including any setbacks. The average approximate gross building area of the 80 to 110 guestroom prototypical hotel is 44,000 to 54,000 square feet.

• Most Courtyard hotels are in suburban markets near metropolitan cities or near industrial parks, airports, malls, or entertainment attractions. The 80 to 110 guestroom prototype Courtyard hotel can be developed in secondary markets with populations ranging from 75,000 to 200,000. The franchisor expects that some Courtyard hotels will be developed in special urban locations and seasonal vacation markets.

7.  Building Permit, Tap, and Impact Fees:  Not determinable because of variables

• You should check with the local government authorities that have jurisdiction over your hotel to determine if there are any tap or impact fees and, if so, how those fees are calculated and the amount to be charged to your hotel project.

8.  Building Construction:  $83,100 to $129,300 per guestroom

• The estimate is for the total construction cost of a Courtyard hotel on a per guestroom basis, including site work, project management fees, and exterior signs.

9.  Kitchen and Laundry Equipment:  $2,700 to $4,600 per guestroom

• This estimate is for laundry equipment, kitchen equipment, and guestroom appliances.

10.  Furniture and Fixtures:  $11,600 to $15,400 per guestroom

• This estimate is for the total cost of furnishing a Courtyard hotel on a per-guestroom basis. The estimate includes guestroom and public space furniture, including all seating and case goods, decorative and plug-in light fixtures, window treatments, carpet, vinyl, interior signage, a flat panel TV for each guestroom, and all associated procurement fees, freight, warehousing, taxes, and installation (excluding carpet and wall coverings).

• The costs reflected above include the cost for the prototypical decor package.

11.  Telephone System:  $124,400 to $209,100

• This estimate is for the telephone, voicemail, and call accounting systems, but does not include maintenance costs. The estimate also includes the costs of installing wireless internet access equipment, which is required for all Courtyard hotels.

12.  Operating Supplies:  $220,000 to $290,500

• This estimate is for inventory such as towels, linens, guestroom amenities, maintenance equipment and supplies, liquor and food, and related supplies, paper goods, and uniforms.

13.  Professional Design Services:  $316,200 to $663,800

• This estimate is for fees and expenses relating to architectural, engineering, and other consultant services for the project, including required certifications of compliance with the American with Disabilities Act and the franchisor’s fire protection and life safety standards, but excludes any building permit fees, impact fees, tap fees, or locally imposed development fees.

14.  Insurance:  $22,600 to $87,000

• The estimate is for the annual cost for insurance, including property insurance, commercial general liability insurance, liquor liability insurance, umbrella/excess liability insurance, employment practices liability insurance, and fidelity bond coverage.

• The franchisor also may require you to obtain property insurance covering risks of loss from certified acts of terrorism as available under the Terrorism Risk Insurance Act.

15.  Start-Up Costs:  $1,700 to $2,300 per guestroom

• This estimate is for start-up costs, including wages, marketing expenses, and other operating costs incurred before opening. This estimate assumes your hotel is located in a suburban market.

16.  Hard Cost Contingency:  5% of hard costs

• The franchisor recommends that you include a project contingency equal to at least 5% of the project “hard costs.” The franchisor considers the following items as project “hard costs”:  building construction; building permit, tap, and impact fees; kitchen and laundry equipment; furniture and fixtures; telephone system; operating supplies; and professional design fees.

17.  Food Safety and Sanitation Compliance:  $210 regardless of hotel size, assuming 3 people at $70 per kitchen manager and engineering leader with responsibility for kitchen equipment

• The estimate covers the costs of meeting food safety and sanitation compliance criteria for kitchen operations, including materials and training.

18.  Opening Advertising:  $25,000 to $50,000

• You are responsible, at your own expense, for providing local advertising, marketing, and promotional communications for the hotel. In conjunction with the initial opening or conversion of your hotel, you must conduct a marketing and advertising campaign in accordance with the franchisor’s standards.

19.  Additional Funds for 3 Months:  $2,800 to $3,400 per guestroom

• This estimate is for prepaid expenses and operating expenses you may incur during the first three months of operation, and is not intended to provide a basis for break-even analysis. This estimate assumes your hotel is in a suburban market.

20.  Total Range:  $9,458,490 to $19,474,730

For 120 to 150 Guestrooms

• The total estimated initial investment necessary to begin operation of Courtyard by Marriott hotel with 120 to 150 guestrooms ranges from $12,889,605 to $24,173,210.

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