Spark by Hilton Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$3,102,531 - $5,514,193
Total US Locations
91
Business Summary
Spark by Hilton operates hotels, providing distinctive, high-quality lodging services in the economy market segment. It caters to a diverse clientele including business travelers, families, vacationers, and groups, depending on the specific market and location. Spark by Hilton primarily offers franchises for hotel conversion projects, which involve renovating existing hotel buildings to meet its established brand standards and operate under the Spark by Hilton brand.
Corporate History
Hilton Franchise Holding LLC was formed in September 2007 in Delaware and became the franchisor for the Spark by Hilton brand in the US on November 11, 2022. Its parent company is Hilton Domestic Operating Company Inc., formed in July 2016, which is a subsidiary of Hilton Worldwide Holdings Inc., formed in March 2010. The broader guest lodging business, which includes Hilton and its predecessor company, Park Hotels & Resorts, Inc. (formerly Hilton Hotels Corporation), has been in operation since 1946. Hilton Worldwide, through its various subsidiaries, owns and licenses numerous other hotel brands. The Spark by Hilton brand currently focuses on conversion projects, where existing hotel buildings are renovated to adhere to its established brand standards.
Financial Overview
Investment Range
$3,102,531 - $5,514,193
Franchise Fee (High)
$75,000
Royalty %
5.5%
Marketing %
3%
Equipment Costs (Low)
$2,384,031
Equipment Costs (High)
$4,204,039
Working Capital
$400,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Spark by Hilton's financial statements, prepared by Hilton Franchise Holding LLC, show an unqualified audit opinion for the years ended December 31, 2024, 2023, and 2022, with no "going concern" qualification. This indicates a healthy financial position for the franchisor. Spark by Hilton's assets and franchise contracts are pledged as collateral for its parent company, Hilton's, debt obligations, which mature from 2025 to 2033. The company also manages significant intercompany balances and distributes retained earnings to its parent, reflecting its integration within the larger Hilton financial structure. For example, in 2024, $1.5 billion in receivables were settled and $1.5 billion of retained earnings were distributed, indicating strong and well-managed financial flows.
Financing Details
Spark by Hilton generally does not offer direct or indirect financing to franchisees. However, Spark by Hilton may, in its sole discretion, offer a development incentive program as a financial contribution to assist with the development or conversion of a hotel. This incentive does not need to be repaid unless the franchise agreement terminates early or a transfer of the hotel occurs. The incentive bears no interest, but if it becomes repayable and payment is not made on time, it accrues interest at 1.5% per month or the highest legal rate. Funds are disbursed after the hotel opens, provided certain conditions are met, such as no material adverse changes, completion of the Property Improvement Plan (PIP), and payment of the franchise application fee. In unique or rare circumstances, Spark by Hilton might also choose to offer other types of financing, such as a mezzanine loan or a guarantee, but the specific terms would be determined individually based on the unique circumstances and financial situation of the hotel.
Performance Metrics
Total US Locations
91
Franchised Units
91
Corporate Units
0
Avg Square Footage
59,000
Franchising Since
2022
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
11
Litigation Summary
Spark by Hilton, operating under Hilton Franchise Holding LLC, has several ongoing lawsuits as of the FDD's issuance date (March 30, 2025). There are five pending class action lawsuits against Hilton Worldwide and other hotel defendants, all filed in 2024, generally alleging violations of the Sherman Act related to improperly sharing information and using revenue management software to set higher room rates in extended stay and luxury hotel markets. Hilton Worldwide intends to vigorously defend its interests in these matters. Additionally, there are two recently concluded actions involving Hilton Domestic Operating Company Inc. The State of Texas sued Hilton alleging violations of the Texas Deceptive Trade Practices Act regarding the disclosure of mandatory guest fees, which was settled in January 2025 for $2.1 million. The State of Nebraska also sued Hilton on similar grounds, settling in February 2024 for $300,000. An older case from September 2020 involving Hilton Franchise Holding LLC and a former Curio brand franchisee for breach of contract and fraudulent inducement was settled in July 2022. Other concluded cases include one from 2013 regarding resort fee disclosures and one from 1970 concerning an antitrust violation. Spark by Hilton reported no collection suits against franchisees or former franchisees in 2024.
Bankruptcy History
Spark by Hilton has no bankruptcy history to report for itself or its key personnel, as stated in Item 4 of the FDD.
Agreement Terms
Initial Term
10 years
Renewal Conditions
Spark by Hilton franchisees do not have the right to renew or extend their franchise agreement. The agreement is non-renewable, meaning it confers no rights of license renewal or extension whatsoever after its stated expiration date.
Training & Support Program
Franchisor Assistance
Spark by Hilton provides extensive support to its franchisees both before and after a hotel opens. Before opening, Spark by Hilton loans its Brand Standards Manual and reviews and approves the franchisee's chosen architect, designers, contractors, and all hotel plans, ensuring compliance with accessibility laws. It also approves the proposed hotel management and provides agreements for its required computer systems (OnQ for reservations, property management, and revenue management; Guest Internet Access System; Global Revenue Optimization (GRO) system; Delphi system for sales and events; Connected Room system; Digital Floor Plan; Digital Key system; and Digital Payment system) and procurement services through Hilton Supply Management (HSM). Initial and ongoing training programs are specified and provided, covering operations, management, sales, and compliance. After opening, Spark by Hilton continues to support franchisees by including their hotels in System-wide directories and national/regional marketing programs, providing access to its global Reservation Service, and administering a quality assurance program through regular inspections and guest satisfaction surveys. Spark by Hilton also offers HSM's procurement services for ongoing maintenance and upgrades. If a hotel consistently fails minimum service quality standards, Spark by Hilton may require participation in a Service Quality Improvement Program, which includes a service improvement plan, re-training, and consulting. Optional learning programs and various sales and distribution programs are also available.
Initial Training Hours
110
Training Location
Mainly virtual and online, with some on-site components and conferences held at various hotel locations.
Ongoing Support
After a Spark by Hilton hotel opens, franchisees receive ongoing support through inclusion in System-wide directories and national/regional marketing programs. Spark by Hilton provides access to its Reservation Service and administers a quality assurance program with periodic inspections and guest satisfaction surveys. Franchisees also benefit from Hilton Supply Management's (HSM) procurement services for maintenance and upgrades. If a hotel consistently fails minimum service quality standards for six months or more, Spark by Hilton may require participation in a Service Quality Improvement Program, which includes a service improvement plan, re-training, consulting, and coaching. Additionally, Spark by Hilton may convene an advisory council for advertising and marketing policies, and offers various sales and distribution programs, as well as optional learning programs.
Franchise Requirements
Ideal Candidate Profile
The ideal candidate for a Spark by Hilton franchise is an experienced individual or entity with strong managerial skills and operating capability in the hotel industry. Candidates must be qualified to manage a hotel, capable of adhering to Spark by Hilton's standards, and not be inexperienced, unqualified in managerial skills or operating capacity. If an owner wishes to manage the hotel directly, they must obtain prior written approval and successfully complete Spark by Hilton's training program. The franchisor also aims to avoid granting franchises to "Competitors" who own, license, or franchise other competing hotel brands.
Industry Experience Required
Yes
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
Spark by Hilton generally grants a non-exclusive license for franchisees to operate a hotel at a specified location. While there are no standard protected territories, Spark by Hilton may agree to a "Restricted Area Provision" for an area around the franchised hotel. If granted, Spark by Hilton defines this territory's size and shape based on the immediate local market and competitive circumstances at the time the franchise agreement is signed. These boundaries are not based on a standard formula and can vary, potentially delineated by cities, metropolitan areas, counties, streets, highways, or a specified radius from the front door of the hotel.
Staffing Notes
Spark by Hilton requires franchisees to provide qualified and experienced management for their hotel, which can be the franchisee themselves (with prior approval and training) or an approved third-party management company. Key personnel, including the general manager, commercial leaders, and sales staff, must complete specific virtual or online training programs, such as General Manager and Sales Leader Training, HPMS Training, and Hilton Core Sales Skills, within 90 days of their start date. All applicable front office personnel must complete Hilton Honors training. Additionally, all hotel staff are mandated to undergo annual compliance training covering a range of topics including diversity and inclusion, harassment prevention, and cybersecurity.