Element Hotels Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$15,307,310 - $45,354,310
Franchise Fee
$75,000
Total US Locations
85
Business Summary
Element Hotels offer high-quality accommodations and related services, designed for extended-stay travelers. They feature natural light, open spaces, and spacious studios, standard rooms, and one-bedroom suites. These hotels are typically found in urban or suburban markets and are known for smart, eco-friendly design, accessible technology, and comfort. Each Element Hotel guestroom includes a fully equipped kitchen, living area, work/dining spaces, and sleeping quarters with a shower. Unique communal areas like 'Studio Commons' interconnect multiple guestrooms for a suite-like experience. Amenities commonly include a complimentary Rise breakfast, Relax evening reception, Restore retail pantry, Motion fitness center, and a saline pool. Element Hotels are also certified by third-party organizations for using sustainable and environmentally friendly materials and practices.
Corporate History
MIF, L.L.C. was formed in Delaware in 2012 and serves as the franchisor for Element Hotels. It began offering Element Hotel franchises in March 2017. Before this, its subsidiaries had offered Element Hotel franchises and owned/managed Element Hotels since 2006. MIF, L.L.C. is a subsidiary of the larger Marriott International, Inc., which is a publicly-traded corporation with a diverse portfolio of over 30 global lodging brands, including luxury, full-service, extended-stay, and mid-scale hotels. Marriott International has also expanded its offerings to include outdoor-focused lodging brands like Postcard Cabins and Trailborn, and has strategic licensing agreements for brands such as Sonder by Marriott Bonvoy and the MGM Collection with Marriott Bonvoy.
Financial Overview
Investment Range
$15,307,310 - $45,354,310
Franchise Fee (Low)
$75,000
Franchise Fee (High)
$150,000
Royalty %
5.5%
Marketing %
1%
Equipment Costs (Low)
$13,750,800
Equipment Costs (High)
$41,742,200
Working Capital
$395,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
MIF, L.L.C., the franchisor for Element Hotels, demonstrates strong financial performance with consistent net income growth over the past three fiscal years, reaching $63.8 million in 2024. The company maintains a healthy member's equity of over $466 million as of December 2024. A notable aspect of Element Hotels' financial structure is that it operates without a direct cash balance, as all transactions, predominantly with its parent company, Marriott International, Inc., are recorded through intercompany receivable and payable accounts. This includes a significant 'Due from related parties, net' balance of $443.6 million in 2024, which also generates substantial interest income. Despite ongoing litigation mentioned in Item 3, Element Hotels has not recorded any accruals for legal contingencies in its financial statements. The independent auditors have issued an unqualified opinion on the financial statements, indicating a fair presentation of its financial position without concerns about its ability to continue as a going concern.
Financing Details
Element Hotels generally does not offer direct or indirect financing or loan guarantees to franchisees. However, under very limited circumstances and at its sole discretion, Element Hotels may offer credit support, such as a contingent guaranty for a portion of a loan from a third-party lender, or provide a mezzanine loan. The specific terms of these options, including amounts, rates, and repayment, are determined on a case-by-case basis and depend on market penetration, hotel size and location, economic conditions, development costs, and the franchisee's commitment to growing the system. Element Hotels also offers a Modular Construction development incentive program for qualifying new-build projects. This program provides 'Key Money' payments of up to $250,000, depending on the type of modular construction used. If the franchise agreement is terminated early, the unamortized portion of this incentive must be repaid.
Performance Metrics
Total US Locations
85
Franchised Units
82
Corporate Units
3
Avg Square Footage
71,500
Franchising Since
2017
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
20
Litigation Summary
Marriott International has a history of legal proceedings, with several significant cases currently ongoing or recently resolved. The most prominent is a large multidistrict litigation (MDL) class action concerning a 2018 data security incident, which is currently in its appellate stage after class certification was reinstated. Related to this incident, Marriott International paid $52 million to US state attorneys general and the FTC, £18.4 million to the UK ICO, and is appealing a fine in Turkey; investigations in Canada and Australia have concluded. Marriott International is also a defendant in two putative class actions filed in 2024, alleging antitrust violations related to information sharing and price-fixing in the hotel industry, both of which are currently pending. A civil suit from 2022 alleging negligence at a Residence Inn resulted in a $16 million jury verdict against Marriott International and other defendants in October 2024, which Marriott International is appealing. Additionally, the District of Columbia has an ongoing investigation and lawsuit against Marriott International concerning resort and amenity fees, with a trial set for November 2025. Marriott International has also initiated several arbitrations and lawsuits against franchisees in 2023 and 2024 for unpaid fees and breaches of contract, with some resulting in settlements or awards in its favor. Concluded actions from previous years include a 2020 class action related to a property system incident, which was settled, and a 2019 class action regarding resort fees, which also settled.
Bankruptcy History
MIF, L.L.C. has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Conditions
Element Hotels franchise agreements are not renewable, and franchisees should not expect to be granted any right to operate under the brand after the initial term expires. However, after the term's expiration, Element Hotels may, at its sole discretion, agree to enter into a new franchise agreement with a franchisee. This new agreement would be based on Element Hotels' then-current form and could include materially different terms and conditions, such as revised franchise fees and duration.
Training & Support Program
Franchisor Assistance
Element Hotels provides comprehensive support to its franchisees, starting before the hotel opens and continuing throughout its operation. In the pre-opening phase, Element Hotels offers design and construction criteria, specifications for furniture, fixtures, equipment, and supplies. It reviews construction plans, assesses compliance during development, and assists with procurement. Element Hotels also conducts inspections to ensure the hotel is ready for operation and provides on-site training for the general manager, management team, and other staff. After the hotel opens, Element Hotels offers ongoing consultation from its representatives regarding design and operations. Franchisees gain access to essential electronic systems, such as the reservation system, and benefit from Element Hotels' efforts to preserve and protect its trademarks, including indemnification against infringement claims for proper use. Element Hotels also directs marketing and advertising activities through its Marketing Fund and provides ongoing training programs for management personnel.
Initial Training Hours
162
Training Location
Franchisor designated locations, on-site, or web-based
Ongoing Support
After Element Hotels open, franchisees receive ongoing support including consultation from Element Hotels representatives at designated offices or on-site at the hotel. Element Hotels provides access to and support for electronic systems, such as the reservation system, and makes its operating standards continuously available. Element Hotels offers additional training programs for hotel and management personnel, with associated costs. The brand also manages a Marketing Fund for ongoing advertising and promotional activities, and reviews plans for hotel upgrades and renovations. Franchisees are required to participate in programs like the Loyalty Program and the Audit Program, and can opt into optional services such as Revenue Management Advisory Services, Area Sales, and various digital marketing programs for additional fees.
Franchise Requirements
Ideal Candidate Profile
Element Hotels seeks franchisees or management companies with demonstrated managerial and operational experience, skills, and capacity to operate a high-quality hotel according to Element Hotels' standards. Ideal candidates must align with Element Hotels' philosophy of providing eco-friendly design, accessible technology, comfort, and excellent guest services, especially for extended-stay travelers in urban or suburban markets. Element Hotels evaluates a candidate's ability to operate the hotel in compliance with its brand standards and may require those not deemed qualified to hire an approved third-party management company, which may need to hold an equity interest. The general manager and other managers are required to devote full time to the management and operation of the hotel.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Territory Size Requirements
Element Hotels franchisees typically do not receive an exclusive territory. If a territory is granted, its specific size and duration depend on the market location. These territories do not grant rights to develop additional hotels or expand the current hotel within that area. A territory may be defined as a specific radius around the hotel or delineated by streets, highways, or other geographical boundaries. The continuation of any territorial rights is contingent on factors like the timely commencement of construction and opening of the hotel.
Staffing Notes
Element Hotels requires that the hotel be operated either directly by the franchisee or by an approved management company. A trained general manager must directly supervise the hotel on-premises, with the expectation that the general manager and other key managers dedicate full-time to the hotel's management and operations. Franchisees are solely responsible for all employment decisions, including hiring, scheduling, disciplining, and terminating staff, and must ensure that enough qualified individuals are employed to adequately staff the hotel. Element Hotels may communicate with hotel managers and management companies about daily operations but does not control their employment policies or decisions.