We recently posted an analysis of the major US hotel brands’ liquidity, urging them to pause collection of franchise fees entirely. This post compares public statements by each of the major brands, rated by flexibility.
Marriott stated in an SEC filing that it reduced the cost of certain systemwide service charges by 50% for April and May, and reduced reimbursable expenses for certain systemwide services on behalf of owners and franchisees by approximately two-thirds.
CEO Arne Sorenson said “These are the times in which we proved that actually even fixed costs are variable, that we will do things we’ve not anticipated before in order to make sure that we are not burdening our owners and not burdening Marriott until such time as the business comes back.” (emphasis added) 
Contracts don’t require flexibility
CFO Leeny Oberg said, “Our contracts are clear that we have the right to be reimbursed for our costs, including the ability to request additional working capital from our managed hotel owners to ensure we are paid. Needless to say, we are doing all that we can to reduce the costs we need to charge the hotels in these times.” (emphasis added) 
Writing on the wall
“Even if hotel owners or franchisees do not declare bankruptcy, they may be unable or unwilling to pay us amounts that we are entitled to on a timely basis or at all, which would adversely affect our revenues and liquidity.” 
“Even in situations where we are not obligated to provide funding to hotel owners, franchisees or joint ventures, we may find it necessary in the interest of our business to provide financial or other types of support to certain of these parties, which could materially increase our expenses.” 
Writing on the wall
“Financing difficulties and significant declines in revenues for most hotels make it more likely that third-party owners of our hotels could declare bankruptcy or face other difficulties with their lenders. Bankruptcies, sales or foreclosures involving our hotels could, in some cases, result in the termination of our management or franchise contracts and eliminate our anticipated income and cash flows, which would negatively affect our results of operations. Hotel owners with financial difficulties may be unable or unwilling to pay us amounts that we are entitled to on a timely basis or at all.”
Writing on the wall
In an SEC filing on April 23rd, Hyatt listed the following factors in the context of COVID-19: 
- “the financial condition of, and our relationships with, third-party property owners, franchisees and hospitality venture partners;
- “the possible inability of third-party owners, franchisees or development partners to access capital necessary to fund current operations or implement our plans for growth;”
- “unforeseen terminations of our management or franchise agreements”
In the same filing, Hyatt stated,
“Moreover, our third-party owners and franchisees could fail to reimburse us for any payments we may be required to make to third-party lenders to whom we made financial guarantees for the timely repayment of all or a portion of the third-party owners’ or franchisees’ debt related to hotels that we manage or franchise. We may find it necessary or in the interest of our business to provide financial or other types of support to certain of these parties, which could materially increase our expenses and cash flows.” 
No recent filings or public comments on the topic.
Flexible on renovations and brand standards
“In addition, to support our owners and manage their cash flows, we have launched a comprehensive package of measures including delaying renovations and relaxing brand standards.”
On April 8th, Choice announced the following measures to assist franchisees:
- Implemented fee-deferral programs for domestic and international franchisees.
- Suspended one-time finance charges, reputation management fees and guest relations handling fees.
On March 19th, the company announced the following relief measures for owners:
- Waiving one half (1/2) of Monthly Fees.
- Waiving one-half (1/2) of Property Revenue Management Fees.
- Reducing Best Western Rewards® (BWR®) loyalty point fees charged to members by one-half without lowering points awarded to loyalty program participants.
- Increasing by 50% hotel redemption compensation for BWR loyalty guest stays.
- Waiving in entirety BWHR co-op marketing fees.