How To's
The REAL Marriott Franchise Cost
A hotel franchise may be a sizable investment, but it provides long-term benefits. For example, many need an accommodation because of their business or leisure trips. One such hotel that many recognize and has a tried and tested system is the Marriott. In fact, they have an established model that can guarantee revenue. But how much does a Marriott Franchise cost?
In this article, learn how you can start a Marriott hotel franchise and know its cost.
The Marriott Franchise and the Market
Before Marriott International, Inc. became one of the leaders in the hospitality industry, it was once an A&W root beer stand in Washington DC. The owners, J. Willard and Alice Marriott grew that business into a restaurant chain. Eventually, that success helped them develop Marriott International.
So far, the Marriott franchise has 30 brands under its portfolio. They classify them into three categories: luxury, premium, and select. As for occupancy for each hotel, it varies. Their hotels have around 100 to 2,000 guest rooms available.
However, they face competition against Wyndham Hotels, the Four Seasons, and Hilton. Even so, Marriott Hotels reported a Revenue per Available Room (RevPAR) of $116.48 in 2019.
Presently, the Marriott brand has over 570+ hotels worldwide. But for all 30 Marriott brands, there are more than 7,000 in operation in 135 countries.
So far, the Marriott hotels and its brand partners have locations in these regions:
- North America
- Europe
- The Middle East and Africa
- Asia Pacific
- Caribbean and Latin America
Training Overview
Franchisee personnel must comply with the training requirements by Marriott. In addition, personnel must also undergo a web-based and marketing training provided by the franchisor. Meanwhile, for web-based training, trainees can access training materials anytime. On the other hand, for the marketing-based training, trainees will attend one in their country in a specific location.
Additional training instances include:
- General managers of the hotel should attend a General Managers Conference held by the franchisor.
- Moreover, franchisees interested in attending leadership seminars or training by the franchisors may attend one.
Obligations & Restrictions
Franchisees may either operate the hotel or outsource management approved by the franchisor. A general manager must oversee operations once training is complete.
Franchisors expect the following:
- All managers should work in the Marriott hotel or brand full-time.
- If an entity manages the franchise, the principals of the entity should sign a guaranty.
- The franchisor provides the goods and services that a franchisee must offer to its guests or clients.
How Much Does a Marriott Franchise Cost?
Marriott estimates that the lowest initial investment a potential franchisee may pay is $74,129,480.00. Meanwhile, you might have to pay $117,209,490 at the most. However, this estimate is applicable only for a 300-room Marriott hotel.
As indicated in the table below, the application fee is at $100,000. However, franchisees have the option to buy an existing Marriott franchise for the greater of $150,000 or $500 per guest room.
Check out the tables below on the breakdown of Marriott franchise cost initial fees and other expenses you might shell out.
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Application Fee | $120,000 | $120,000 |
| Pre-Opening Training, Revenue Management, Marketing Support, and Related Services | $129,000 | $196,000 |
| Property Management System, Reservation System, Yield Management System, Sales and Catering System | $260,000 | $300,000 |
| Other Systems and Training | $84,000 | $104,000 |
| Market Feasibility Study | $15,000 | $25,000 |
| Real Estate | Not determinable because of variables. | |
| Building Permit, Tap, and Impact Fees | Not determinable because of variables. | |
| Building Construction (per guestroom) | $187,900 | $298,600 |
| Kitchen and Laundry Equipment (per guestroom) | $5,600 | $6,900 |
| Furniture and Fixtures (per guestroom) | $24,700 | $30,100 |
| Technology Hardware & Software and Network Infrastructure (per guestroom) | $2,500 | $13,300 |
| Operating Supplies (per guestroom) | $5,800 | $7,100 |
| Professional Design Services (per guestroom) | $9,400 | $14,900 |
| Insurance | $99,000 | $287,000 |
| Start-Up Costs (per guestroom) | $4,800 | $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 | $115,000 | $200,000 |
| Additional Funds per guestroom (first 3 months) | $3,500 | $8,000 |
| ESTIMATED TOTAL* | $74,129,490 | $117,209,490 |
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: 1.62% of gross room sales. This includes a contribution to the marketing fund of 1% of gross room sales as well as $50,000 per year; plus $510 per guestroom per year. |
| Marriott Bonvoy | An amount equal to: 4.2% of the total guest folio generated by guests earning loyalty points or miles; plus for a group event (involving at least 10 guestrooms) and/or a catering event arranged by a meeting planner or other individual earning loyalty points or miles for such event, 1% of the gross revenues generated by each such group or catering event, up to a maximum amount of $300 per event. |
| Revenue Management Advisory Services | $2,750 to $7,875 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. This 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 | $112.50 to $266.67 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. |
| Customer Engagement Center (CEC) Property Support Services (PSS) | The cost of this program is allocated among participating hotels. |
| 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. |
| Group Demand Generation | $1.00 per group 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 booked using QuickGroup. Added to that, 6% of any event space rental, catering, and audio visual revenue. No adjustments are made for changes after the initial booking. |
| Field Marketing | $5,700 to $170,000 per year, depending on the services provided. |
| Marriott Digital Services | Varies depending on the product or service selected. |
| Transaction-Based Media | 9% of applicable gross room revenues, not to exceed $200 per stay. |
| Luminous | $995 |
| Point-of-Sale (POS) System | $9.64 per month per POS workstation for software and support. |
| EMPOWER: Guest Experiences Reservations Add-On License | $493 per year per reservations agent at the hotel. |
| Varies | |
| Opera Exchange Interface (OXI) License and Support | $440 per year. |
| Unauthorized Electronic Identifier | $100 per day an unauthorized email address, domain name, mobile application name, website, or other electronic identifier is in use. |
| Credit Card Processing | $0.047 per settlement transaction. |
| Computer and Server Software and Support | $11.07 to $22.71per PC per month; $20.65 to $66.46 per Apple computer per month; $137 to $1,080 per server per month. |
| Event Technology Services | Varies. |
| Mobile Device Management | $5.00 to $5.50 per device per month. |
| Mobile Key | $8 to $11 per guestroom per year for software and support. |
| Interactive Voice Response | $600 to $3,000 per year. |
| Marriott Environmental Sustainability Hub (MESH) | $305 per year. |
| Brand Standards Audit (BSA) and Re-audit | $1,350 to $1,750 ($2,750 to $3,250 for JW Marriott Hotels) per audit and re-audit (excluding one annual BSA). |
| 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. If it’s for an in-person meeting at the hotel if the franchisor deems it necessary or desirable. |
| BSA/GSS Improvement Program | $20,000 |
| Guest Satisfaction Survey Data Manipulation Charge | Up to $5,000 per quarter. |
| Food Safety Re-Inspection | $500 per re-inspection. |
| Fire Protection and Life Safety Re-Inspection (BSA-related) | $500 per re-inspection. |
| 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. |
| Design & Construction Review Services | $20,000 |
| Interior Design Firm Screening and Coordination | $2,500 per screen of interior design firm. In addition, $30,000 to $50,000, if franchisees retain a non-recommended interior design firm. |
| PIP Non-Compliance Re-Inspection | $10,000 per re-inspection. |
| Renovation Non-Compliance and 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. |
| Additional Design/Construction Review Services | Varies. |
| Fire Protection and Life Safety Inspection and Testing, and Compliance Audits | Approximately $500 to $19,500. This is based on the services rendered. Plus, the time needed for the testing and inspection, the size of the hotel, and the complexity of its design. |
| Post-Opening Authorization to Open (ATO) Work Inspection | $910 per day per inspector. |
| Expansion | $400 per guestroom. |
| 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. It depends on the country involved and whether an entity or person is being checked. Expedited turnaround is available at an additional cost. |
| Operator Screen | $7,500 |
| Temporary Closure and Re-Opening Support Services | $3,000 to $25,000 depending on the size and location of the hotel and the length of time the hotel is closed. |
| Destination and Resort Fees | Application fee of $1,500. Plus, $550 per year if the application to charge destination or resort fees is approved. |
| Training | Varies. |
| Transfer | The greater of $150,000 or $500 per guestroom. |
| 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 Support | $1.00 per guestroom per year but not exceeding $800 per year. |
| Best Rate Guarantee Non-Compliance | $50 to $500 per violation based on the number of violations each month. |
| Customer Issue Resolution | $55 per customer complaint or other customer service issue handled by the franchisor. And reimbursement of all costs incurred by the franchisor to resolve a matter. This also includes compensation paid by the franchisor 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) | $3.75 per guestroom per year. Meanwhile, it s $4.00 per guestroom per year for JW Marriott hotels. |
| Franchisee Associate Job Postings | $135 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 per year. |
| Franchise Operations Support Resources | Varies; approximately $400 to $1,500 per day per employee. It depends on the experience and area of expertise of the employee. |
| Pure Grey Licensing and Consulting Services | Approximately $25,000 to $75,000 per year. |
Did You Know?
- The initial franchise term for a Marriott franchise is 20 years. Usually, it’s the 20th anniversary of the opening date. In addition, franchisees should remember that the franchise agreement is non-renewable.
- Credit support may be available for franchisees in need. Marriott offers two possibilities. The first is a third-party lent contingent guaranty of a portion of a loan. The other one is a mezzanine loan.
- The Marriott franchise is committed to sustainability initiatives. For example, they reduced water and carbon intensity in 2018. Furthermore, they no longer use plastic straws and stirrers.
- Marriott International, Inc. ensures that all of its brands can stay on top because of its Revenue Generation Engines model. Moreover, they have a loyalty program called Marriott Bonvoy to make sure that returning guests become regulars in all of their hotels.
- They help franchisees in operations, sales and marketing, revenue management, and among others. As the franchisor, they assist in the pre-opening, opening, and post-opening.
How to Start a Marriott Franchise?
Now that you know the Marriott franchise cost and other details, here’s how you can start your franchising journey with the hotel chain.
The first step is to go to the Hotel Development Website. From here, you can click on the Let’s Talk button. Then, you need to fill out and submit a form to show your interest in developing a new Marriott hotel brand in your location. After that, a Marriott associate will contact you for more details.
Are you ready to make it big by owning a Marriott franchise? Armed with the knowledge of the Marriott franchise cost and other details, consider the Marriott chain as one of your options for franchising.
Get more franchise information here at Franchise How!