Destination by Hyatt Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$45,790,776 - $253,820,733
Franchise Fee
$79,600
Total US Locations
14
Business Summary
Destination by Hyatt® offers franchises to operate lifestyle resort and hospitality affiliations. These are resort hotels that operate under a separate tradename owned by the franchisee, but are affiliated with the Destination by Hyatt® brand. Each Brand Hotel is expected to be unique in its design, concept, appearance, and some aspects of its operations, reflecting its local market. Hyatt Franchising, L.L.C. expects the franchisee to have primary responsibility for developing the hotel's distinct brand identity, with limited involvement from the franchisor, while ensuring consistency with Hyatt's overall brand positioning for Destination by Hyatt® hotels.
Corporate History
Hyatt Franchising, L.L.C. was originally incorporated in Delaware as Hyatt Franchise Corporation before converting to its current limited liability company structure. This entity first began offering franchises for full-service hotels under the Hyatt® name in December 1994. Although it stopped offering those specific franchises between April 1997 and September 2006, it resumed offering them and continued until January 2015. The parent company, Hyatt Hotels Corporation, has a longer history, operating and managing hotels since 1957. In December 2018, an affiliate of Hyatt acquired Two Roads Hospitality, which included the Destination by Hyatt® brand. Following this acquisition, Hyatt Franchising, L.L.C. began offering franchises for Destination by Hyatt® hotels in May 2019.
Financial Overview
Investment Range
$45,790,776 - $253,820,733
Franchise Fee (Low)
$79,600
Franchise Fee (High)
$148,450
Minimum Net Worth
$7,348,000
Royalty %
7%
Marketing %
3.5%
Equipment Costs (Low)
$7,117,300
Equipment Costs (High)
$26,396,000
Working Capital
$1,125,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Hyatt Hotels Corporation, the parent company of Hyatt Franchising, L.L.C., has audited consolidated financial statements. The independent auditors, Deloitte & Touche LLP, issued an unqualified opinion, meaning the financial statements are presented fairly in all material respects. However, the audit report highlights 'Critical Audit Matters' related to 'Deferred Revenue Related to the Loyalty Program' and 'Goodwill.' For goodwill, significant assumptions and judgments are involved in its fair value determination, and a 5% decline in underlying cash flows or a 1% increase in discount or capitalization rates could lead to a material impairment charge. The consolidated balance sheets show that current liabilities ($3,274 million) exceed current assets ($2,733 million) as of December 31, 2024, indicating a negative working capital position. Despite this, the company reported a net income of $1,296 million in 2024.
Financing Details
Hyatt Franchising, L.L.C. does not have a fixed financial assistance program and typically does not offer financing directly to franchisees. However, in certain situations, it may periodically offer financial assistance to franchisees developing new Brand Hotels or converting existing hotels to the Hotel System. There are no formal criteria for determining which franchisees receive assistance, and the terms (amount, interest rate, repayment) can vary widely based on the specific agreement and circumstances. Hyatt Franchising, L.L.C. has no obligation to provide financial assistance to any franchisee. Neither Hyatt Franchising, L.L.C. nor its affiliates offer direct or indirect financing, nor do they guarantee any franchisee's notes, leases, or other obligations.
Performance Metrics
Total US Locations
14
Franchised Units
4
Corporate Units
10
Franchising Since
1994
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
1
Litigation Summary
Hyatt Franchising, L.L.C. has disclosed one litigation case during the 2024 fiscal year. This claim was brought by Hyatt Franchising, L.L.C. against a group of franchisees, including Imperial Hotels, LLC, and several individuals, for unpaid royalty fees. The case, titled 'Hyatt Franchising, L.L.C. v. Imperial Hotels, LLC, Sunikumar Patel, Akash Maheshwari, Roshni Jariwala Desai, Madhvan Nair, Daksha Patel, Sanjay Desai, Raj Gandhi, Usha Patel, Vinod Jayrambhai Patel and Mina Jariwala,' was filed with the American Arbitration Association in 2024. No other litigation is required to be disclosed by Hyatt Franchising, L.L.C.
Bankruptcy History
Hyatt Franchising, L.L.C. has no bankruptcy history that is required to be disclosed.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Destination by Hyatt® franchisees must have substantially complied with the agreement during its term and be in full compliance as of the expiration date. They must also meet Hyatt Franchising, L.L.C.'s then-applicable standards for Brand Hotel franchisees and owners, have achieved passing Quality Assurance Scores in the preceding three years, and have the right to possess the Hotel for at least 10 years after the agreement expires. Franchisees must provide written notice of their intent to renew between 18 and 21 months before the agreement expires and pay a non-refundable PIP fee. If approved, franchisees must renovate, remodel, or expand the Hotel and its FF&E to meet current brand standards for new similarly situated Brand Hotels, as outlined in a Property Improvement Plan (PIP). Finally, franchisees and their guarantors must sign Hyatt Franchising, L.L.C.'s then-current franchise agreement (which may have materially different terms, including fees) and ancillary documents, along with general legal releases.
Training & Support Program
Franchisor Assistance
Before the hotel opens, Hyatt Franchising, L.L.C. or its affiliates will approve the site, provide design and development specifications (including Design and Construction Standards), identify required FF&E and other items, approve initial design documents, and approve the Food & Beverage Operations Plan. They will also approve a pre-opening sales office and marketing program, provide data installation for reservation systems (CRS, GDS, ADS), and grant access to the CRS. Hyatt Franchising, L.L.C. also provides initial training for senior manager-level employees (Core Management) and other personnel, grants access to System Standards, and authorizes the hotel to open. During the hotel's operation, Hyatt Franchising, L.L.C. continues to provide System Services, advises on operations, marketing, and advertising, allows the use of Proprietary Marks and confidential information, maintains CRS access, conducts periodic inspections (Quality Assurance and Compliance Program), and provides PMS hosting and subscription services. Optional services such as revenue management, field marketing, central sales, global property guest services, and digital ancillary services are also available if the franchisee chooses to acquire them.
Initial Training Hours
409
Training Location
Chicago, Illinois, or virtually, with some on-site at the Hotel
Ongoing Support
After the hotel opens, Destination by Hyatt® franchisees receive continuous support through ongoing System Services. Hyatt Franchising, L.L.C. advises on hotel operations, System Standards, and marketing/advertising. Franchisees are permitted to use the Proprietary Marks, Confidential Information, and Copyrighted Materials, and are provided access to the central reservation system (CRS). Hyatt Franchising, L.L.C. conducts periodic inspections as part of its Quality Assurance and Compliance Program and provides hosting and subscription services for the property management system (PMS). If any Core Management team member or other required personnel leaves, their replacement must attend and complete specified mandatory brand standard training programs within 90 days. Hyatt Franchising, L.L.C. may also require Core Management and other personnel to participate in regional/national conventions and additional brand standard training programs. Optional training courses are also offered periodically throughout the franchise term.
Franchise Requirements
Ideal Candidate Profile
Hyatt Franchising, L.L.C. primarily seeks business entities, rather than individuals, to acquire Destination by Hyatt® franchises. These franchisee entities, or their parent or affiliates, must have been in business for at least five years and possess a net worth of at least $7,348,000. While not explicitly stated as a hard requirement for the franchisee entity itself, prior experience or familiarity with the Hotel System is preferred, as lacking it may necessitate additional pre-opening services. The franchisee entity must ensure that either an approved management company or the franchisee itself retains and exercises direct management control over the hotel, with a dedicated Core Management team devoting full-time effort to the hotel's day-to-day operations. The emphasis is on financially stable and experienced entities with a strong management structure in place for the hotel's operation.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Min Years Experience
5
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
Non-Exclusive
Territory Size Requirements
Destination by Hyatt® territories, referred to as an 'Area of Protection' (AOP), are defined by mutual agreement before the Franchise Agreement is signed. The boundaries are typically set using geographic references like streets or rivers, or as a circular radius with the hotel at its center. The size of the AOP varies based on the hotel's size and location, ranging from a few blocks in densely populated urban areas to approximately a 3-mile radius from the hotel's entrance in less populated regions.
Staffing Notes
Hyatt Franchising, L.L.C. requires that either an approved management company or the franchisee (if approved to manage the hotel) maintain direct management control over the hotel's business. This entity is responsible for hiring and employing all Core Management and other hotel personnel. The Core Management team, which typically includes the general manager, assistant general manager, rooms director, director of sales, engineering director, director of food and beverage, director of catering, and executive chef, must be properly trained and in place at all times. All Core Management members must devote their full working time to the hotel's operational responsibilities and cannot hold concurrent positions at other lodging facilities or in the lodging industry. If any Core Management personnel leave, their replacement must complete specified mandatory training within 90 days. The franchisee is also responsible for training any Food & Beverage (F&B) Operators and Spa Operators.