Global Franchise and License Fee Comparison

Project Scope

Horwath HTL conducted research and present a report that will state the typical fees and other economic terms found in the Hotel Management Agreements (HMA) and licensing or franchise agreements in Europe, Asia and North America.

Horwath HTL conducted an in-depth study to evaluate typical fees and economic terms within Hotel Management Agreements (HMAs) and licensing or franchise agreements across Europe, Asia, and North America. This research aimed to provide actionable insights for one of the largest gaming companies in the U.S. seeking to diversify its portfolio by expanding into non-gaming hotels globally.

The study revealed key variations in the economic structures of these agreements across regions:

In Europe, franchising is less prevalent compared to North America but has been gaining momentum. Franchise fees typically range from 4% to 6% of gross room revenue. HMAs in Europe commonly feature base management fees of 2% to 3% of gross revenue and incentive fees of 8% to 15% of the hotel’s gross operating profit (GOP). Marketing and reservation fees average 2%, though these vary by brand and market maturity.

Asia exhibits more flexible terms due to the region’s rapid growth and competitive markets. Franchise fees in Asia tend to be slightly lower, ranging from 3% to 5% of gross room revenue. Management agreements often feature base fees of 2% to 4% of gross revenue, with incentive fees leaning higher at 10% to 20% of GOP. Operators in Asia often require technical service fees during the pre-opening phase, typically charged as a fixed percentage of total development costs.

North America maintains a mature and standardized market for franchising and HMAs. Franchise royalty fees are typically 5% to 6% of gross room revenue, with additional marketing and reservation fees ranging from 2% to 4%. HMAs include base fees of 3% to 4% of gross revenue and incentive fees averaging 10% of GOP. Fee structures are often transparent, with more flexibility for experienced operators.

Horwath HTL’s findings provide a comprehensive benchmark, empowering the gaming company to structure competitive agreements as it ventures into the global hospitality industry.

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