How to Finance a Homewood Suites Franchise: Fees and Royalty Ramp
By Chris Cornella
A Homewood Suites franchise loan pays for one of the longest-running extended-stay concepts in the U.S. lodging market: a hotel built around residential-style suites, full kitchens and guests who stay for a week or more. Because a new Homewood Suites is a multimillion-dollar real estate development and an operating business at the same time, the financing has to satisfy a construction or acquisition lender, the SBA or conventional underwriting rules, and the franchisor’s own approval process.
Below, we break down what the 2026 Homewood Suites by Hilton Franchise Disclosure Document (FDD) says about the application fee, the stepped royalty, the program fee and the estimated initial investment, and then walk through how owners finance new construction, conversions, acquisitions and renovations for this brand.
US Professional Funding is not affiliated with, sponsored by or endorsed by Homewood Suites by Hilton; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to review and approval. Nothing here is legal, tax or investment advice; review the current FDD and franchise agreement with a franchise attorney, an accountant and an experienced hotel advisor before you commit.
Homewood Suites Franchise Loan at a Glance
- Application fee, new development or conversion: $100,000 plus $400 for each additional guest room or suite over 150, according to the 2026 FDD (issuance date March 30, 2026).
- Change of ownership and re-licensing: $200,000 and $100,000 respectively.
- Royalty for new development or conversion: 3.5% of Gross Rooms Revenue in the first year of operation, 4.5% in the second year and 5.5% for the rest of the term.
- Royalty for change of ownership or re-licensing: 5.5% of Gross Rooms Revenue.
- Program fee: 2.5% of Gross Rooms Revenue, which the franchisor may change.
- Estimated initial investment: $23,757,245 to $34,728,465 for a newly constructed 131-suite hotel, excluding real property, including up to $261,924 paid to the franchisor or its affiliates.
- System size: 560+ hotels open with 64,000+ rooms in 5 countries and territories, plus 140+ hotels in development, according to the brand’s fact sheet updated July 2026.
- SBA Franchise Directory: listed as Homewood Suites by Hilton, with a note on third-party management agreements.
What Is Homewood Suites by Hilton?
Homewood Suites is an upper midscale, all-suite hotel brand designed for extended stays. The 2026 FDD says the hotels are designed for the extended-stay guest, which it defines as a guest who stays five or more consecutive nights in the same hotel, while also serving business travelers, families, vacationers and groups.
A long franchising track record. According to the FDD, a prior owner of the brand franchised Homewood Suites hotels from March 1988 to October 2007, a predecessor franchisor offered franchises from October 2007 to March 2015, and the current franchisor, Hilton Franchise Holding LLC, has offered U.S. franchises since March 30, 2015. Affiliates of the franchisor own, lease or manage some Homewood Suites hotels worldwide.
The guest experience. The FDD describes studio rooms and two-room suites, each with a separate kitchen and living room, plus a pool, an exercise center, limited meeting space, an on-premises convenience store and a business center. Guests receive a complimentary breakfast and an “Evening Manager’s Reception” or cocktail hour where permitted by law. The brand’s fact sheet adds fully equipped kitchens, outdoor grills and firepits, guest laundry and a pet-welcoming policy at all hotels.
Who it competes with. The FDD lists competition from other chain and independent hotels, other extended-stay facilities and corporate or short-term rental apartments. That competitive set matters to lenders, because extended-stay demand can shift when new apartments or rental units enter a market.
Why lenders like the format. Longer average stays tend to reduce turnover costs and steady occupancy, and the limited food and beverage program keeps staffing simpler than a full-service hotel. On the other hand, the breakfast and evening reception, the convenience store and in-suite kitchens all carry real operating and replacement costs, so lenders expect projections that reflect the full brand program.
Homewood Suites Franchise Costs
Application fee. The 2026 FDD sets the franchise application fee for a new development or conversion at $100,000 plus $400 for each additional guest room or suite over 150. A change of ownership carries a $200,000 fee and re-licensing a $100,000 fee. If an applicant withdraws before approval or is denied, the fee is refunded less a $7,500 processing fee; after approval, it is generally non-refundable.
What owners actually paid. The FDD says the fee is usually applied uniformly but may be reduced, for example in light of development incentives. In 2025, franchisees paid application fees ranging from $0 to $100,000 for new construction or conversion, $20,000 to $200,000 for change of ownership and $0 to $100,000 for re-licensing. A reduced fee lowers the up-front cash need, but lenders will want to see the terms behind it.
Land and construction. The FDD’s investment estimate excludes real property. Land acquisition or a ground lease, site development, the building, parking and the pool are typically the largest pieces of a new-build budget and are financed through construction debt plus the owner’s equity.
FF&E and systems. Each suite needs living and sleeping furniture, a full kitchen and soft goods, and public areas need lobby, breakfast and fitness furnishings. The FDD lists OnQ system costs for hardware, software and installation of $28,296 to $118,424.
Opening charges. The FDD lists training program fees of $5,000 to $17,500, an Opening Process Services Fee of $6,000 and other initial start-up fees of $5,100. Procurement and services fees of 4% to 10% of project cost apply when the franchisor or its affiliates furnish, supply or equip the hotel at the owner’s request. A PIP fee and a construction or renovation extension fee are each $10,000.
Total investment. According to the 2026 FDD cover page, the total investment necessary to begin operation of a newly constructed 131-suite Homewood Suites ranges from $23,757,245 to $34,728,465, excluding real property, including up to $261,924 paid to the franchisor or its affiliates. A Homewood Suites franchise loan request usually organizes the budget around categories like these:
- Application fee ($100,000 plus $400 per guest room or suite over 150)
- Building construction, site work and design fees
- FF&E for suites, kitchens, the lobby, breakfast area and fitness center
- OnQ systems ($28,296 to $118,424)
- Training ($5,000 to $17,500), opening process services ($6,000) and start-up fees ($5,100)
- Signs, operating equipment, supplies and opening inventory for the convenience store
- Pre-opening salaries, sales and marketing, insurance and permits
- Additional funds to cover the initial period of operation
Check every line against the Item 7 table in the current FDD and against your own contractor and FF&E bids. The FDD’s range assumes a prototype; your actual site, market and design choices determine your budget.
Ongoing Fees and How They Affect Your Loan
The stepped royalty. For a new development or conversion, the 2026 FDD sets the royalty at 3.5% of Gross Rooms Revenue during the first year of operation, 4.5% during the second year and 5.5% for the remainder of the term. Changes of ownership and re-licensing pay 5.5% from the start. Projections for a new hotel should step the royalty up year by year, and an acquisition should be modeled at the full rate.
Program fee. The monthly program fee is 2.5% of Gross Rooms Revenue, and the FDD says the franchisor may change it.
Technology charges. The FDD lists monthly OnQ connectivity of $400 to $600, OnQ hardware and software charges of $1,321 to $2,714 a month and OnQ email at $7.92 per user per month, along with connected room maintenance fees.
Loyalty and reservations. Owners must participate in the franchisor’s Hilton Honors programs. The FDD lists a frequent traveler fee of 1.7% of total eligible guest folio, waived for stays in which the guest enrolls on-property, an advance-purchase fee of 1.35% of eligible digital direct revenue capped at $30 per stay, and third-party reservation charges of up to $6.05 per stay.
Renovation and compliance charges. A past due renovation fee of $10,000 every six months applies if required work is late, a special audit costs $3,000 and adding rooms carries a $400 per room addition fee.
Why this matters for debt sizing. Lenders size hotel loans to net operating income after franchise costs. The low first-year royalty helps a new hotel during ramp-up, but a lender will usually underwrite stabilized cash flow at the 5.5% royalty plus the program, loyalty and technology charges. Building that into your pro forma from the start avoids an unpleasant surprise when the lender runs its own numbers. Our article on how lenders underwrite occupancy, ADR and cash flow explains the math.
Franchisor Requirements for New Owners
The parts of the 2026 FDD we reviewed do not publish a fixed minimum net worth or liquidity figure. Approval depends on the franchisor’s review of the owner group, the site or existing hotel, the development or renovation plan and the management arrangement.
- Owner financial strength: expect to document net worth, liquidity and the source of equity, both for the franchisor and for your lender.
- Guaranty: the FDD’s exhibits include a guaranty of the franchise agreement, so principals typically guarantee the franchise obligations.
- Management: the FDD says an owner may be offered a management agreement with a franchisor affiliate; owners can also self-manage or hire an independent manager, which affects SBA eligibility.
- Construction and renovation standards: projects must meet brand standards and deadlines, with extension and past due renovation fees if they slip.
- Lender comfort letter: the FDD includes lender comfort letter forms, which lenders typically require so they can step in or cure defaults if needed.
Lenders apply their own standards on top of the franchisor’s. A first project with no hotel operating history will face more scrutiny than an owner group adding to an existing portfolio.
Ways to Own a Homewood Suites
Ground-up development. A new Homewood Suites starts with a site in a market with extended-stay demand, such as a corporate, medical or government center. The owner obtains franchise approval, designs to brand standards and finances construction. Our page on new hotel construction financing describes how these projects are funded.
Conversion. An existing all-suite or extended-stay hotel may convert under a franchise application and PIP. Conversions benefit from the stepped royalty for new development or conversion, but the PIP may require kitchens, suite layouts and public spaces that match the brand.
Buying an existing Homewood Suites. A change of ownership carries a $200,000 application fee, the 5.5% royalty and usually a PIP. Lenders underwrite the hotel’s actual performance and the cost of the PIP. See our options for hotel acquisition loans.
Re-licensing. Owners whose franchise is nearing expiration can re-license for a $100,000 fee and a PIP, often paired with a refinance to fund the renovation.
Financing Options for a Homewood Suites Franchise
Construction financing. New Homewood Suites projects are usually funded with a construction loan drawn in stages as the building rises, then refinanced into permanent debt once occupancy stabilizes. The lender will want to see the full budget, a contractor with hotel experience, a realistic schedule and the owner’s equity in place.
SBA 7(a) loans. The SBA 7(a) program can fund hotel purchases, conversions, renovations, FF&E and working capital for eligible owner-operators. For a Homewood Suites, 7(a) financing is most often a fit for an acquisition, a PIP or one portion of a larger project rather than an entire ground-up budget.
SBA 504 loans. The SBA 504 program finances owner-occupied real estate and long-lived fixed assets with a first-lien loan from a lender, a second-lien loan through a certified development company and the borrower’s equity. For hotel construction or purchase, 504 is often the SBA structure owners consider first.
Conventional loans. Conventional business loans size the debt to net operating income, appraised value and the owner group’s strength. They suit larger projects, portfolio owners and owners who use franchisor-affiliated management.
FF&E loans and leases. Suite furniture, kitchen packages, breakfast equipment, laundry machines, fitness equipment, televisions and technology can be financed separately or included in the main loan. Separate FF&E financing can match repayment to the useful life of the items.
PIP and renovation loans. Acquisitions, conversions and re-licensing usually come with a PIP. It can be funded through a holdback in the acquisition loan, a renovation loan or a refinance. Read more about financing brand-required hotel renovations.
Working capital. Extended-stay hotels can see demand shift with corporate projects, school calendars and seasonal travel. A line of credit can bridge slower months, fund pre-opening costs and cover ramp-up. Our guide to managing seasonal hotel cash flow covers planning for those swings.
Seller financing. On some acquisitions, a seller may carry a portion of the price. A seller note needs the senior lender’s approval, is typically subordinate to the senior loan and can be limited under SBA program rules.
SBA Loans for Homewood Suites Franchisees
The SBA Franchise Directory lists franchise brands whose agreements have been reviewed for SBA eligibility. Lenders generally rely on the directory when considering an SBA loan to a franchisee, but a listing does not approve any particular borrower or hotel.
The listing. Homewood Suites by Hilton appears on the SBA Franchise Directory, so Homewood Suites owners can be considered for SBA 7(a) and 504 financing, subject to SBA size standards, eligibility rules and the lender’s credit review.
What the directory note means. The listing carries a note: if the applicant also operates under a management agreement with a third party, the lender or certified development company must review that agreement under SBA rules to decide whether the applicant and the management company are affiliated. The applicant is not eligible if the management company is, or is affiliated with, the franchisor.
Put simply, an owner seeking an SBA loan cannot use a management company owned by or affiliated with the franchisor, even though the FDD notes that owners may be offered that option. Self-management or an independent manager can work, but the management contract will be reviewed for shared ownership, control or other affiliation. If you want franchisor-affiliated management, plan on conventional financing.
Program limits. The SBA 7(a) program maximum is currently $5 million, and program rules can change. Larger Homewood Suites projects often use SBA 504 or conventional financing.
Making the application stronger. SBA lenders look for a complete file: the franchise approval or application, the construction budget or PIP, a market study showing extended-stay demand, the management plan and agreement, personal financial statements and tax returns for each owner, and a sources-and-uses table that ties every dollar together.
How Lenders Evaluate a Homewood Suites Deal
Each Homewood Suites franchise loan is judged on the hotel, the market and the owners.
Personal credit and financial history. Lenders review personal credit, tax returns and financial statements for each meaningful owner and typically require personal guarantees.
Net worth and liquidity. Beyond the equity injection, lenders want to see post-closing liquidity that can absorb a cost overrun, a slow ramp-up or a soft year.
Hotel experience. Owners with extended-stay or select-service operating history present a stronger request. Owners new to hotels usually pair with an experienced independent management company.
Business plan and projections. Projections should show occupancy, average daily rate and RevPAR through stabilization, the mix of long-stay and transient guests, the stepped royalty, the program fee, loyalty and technology costs, breakfast and evening reception costs, convenience store sales and costs, management fees and an FF&E reserve.
The FDD and franchise agreement. Lenders review the franchise term, PIP obligations, transfer and termination provisions and the comfort letter. They generally want the franchise to run at least as long as the loan.
Real estate. An appraisal, an environmental report, a property condition report for existing hotels and a review of zoning and access are standard. Ground leases must extend well beyond the loan term.
Historical financials for acquisitions. For an existing Homewood Suites, lenders review several years of operating statements, market performance reports and tax returns. Our hotel due diligence checklist lists the documents buyers should request.
Suites, Kitchens and Renovation Cycles
The Homewood Suites product shapes both the initial budget and future capital needs.
Full kitchens in every suite. Refrigerators, dishwashers, cooktops, microwaves and cookware need regular replacement. Owners who budget for kitchen packages within the FF&E reserve avoid large surprise purchases.
Breakfast and evening reception. Daily breakfast and the evening reception require food service equipment, serving areas and supplies, even though the hotel does not run a full restaurant.
Public areas and amenities. The pool, exercise center, meeting space, business center and convenience store all have their own renovation cycles and should appear in the long-term capital plan.
PIPs and deadlines. The $10,000 PIP fee and the $10,000 past due renovation fee every six months show why PIP work should be fully funded and scheduled before closing on an acquisition.
FF&E reserve. Lenders typically require an FF&E reserve funded from operations to pay for future renovations without new borrowing.
Multi-Unit Growth and Development Agreements
Many hotel groups add Homewood Suites properties over time, using the cash flow and track record of stabilized hotels to support new projects.
Financing additional hotels. Once a first hotel is stabilized, lenders can consider its performance alongside a new project. Owners often hold each hotel in its own entity with its own loan, but as a group grows, portfolio loans and cross-collateralized structures become possible. Our article on hotel portfolio financing covers those options.
Development incentives. The FDD lists a development incentive promissory note among its exhibits and notes that application fees may be reduced for development incentives. Disclose any incentive to your lender, since its repayment terms can affect underwriting.
Reporting. As the portfolio grows, lenders expect consolidated financial statements, property-level reports and a management team that can oversee multiple hotels.
Real-World Scenarios
A new hotel near a corporate campus. A developer with select-service experience builds a Homewood Suites near a large employer that sends consultants and trainees for multi-week assignments. The project is financed with a construction loan converting to permanent SBA 504 financing, and the pro forma steps the royalty from 3.5% to 4.5% to 5.5% across the first years.
An acquisition with a PIP. An investor group buys an older Homewood Suites. It pays the change of ownership fee, receives a PIP for suite and kitchen upgrades and finances the purchase and PIP together with a conventional loan because it plans to use franchisor-affiliated management.
A conversion of an extended-stay property. The owner of an independent extended-stay hotel converts to Homewood Suites. A refinance funds the PIP, and the owner retains an independent management company so part of the financing can be considered under the SBA program.
A re-licensing refinance. A long-time owner re-licenses the hotel, refinances maturing debt and uses the new loan to complete the required renovation before the deadline.
Common Mistakes to Avoid
- Underwriting a new hotel at the first-year 3.5% royalty instead of the stabilized 5.5% rate
- Forgetting that the FDD’s investment estimate excludes land
- Planning on SBA financing while using a franchisor-affiliated management company
- Agreeing to a purchase price before receiving the PIP
- Leaving breakfast, evening reception and convenience store costs out of projections
- Ignoring competition from apartments and short-term rentals in the market study
- Underfunding the FF&E reserve for kitchen replacements
For more lessons from hotel deals, read the hotel loan mistakes that cost owners the most.
Next Steps to Finance Your Homewood Suites Franchise
Step 1: Confirm the opportunity. Identify the site or hotel and confirm that the market has enough extended-stay demand to support it.
Step 2: Study the FDD. Review Items 5, 6, 7, 17 and 19, the franchise agreement, the guaranty and any incentive documents with a franchise attorney and accountant.
Step 3: Settle the management plan. Choose between self-management, an independent manager or a franchisor affiliate, knowing how that choice affects SBA eligibility.
Step 4: Build a complete budget and pro forma. Combine contractor and FF&E bids, the FDD’s fee schedule and a feasibility study, and step the royalty correctly.
Step 5: Speak with a financing specialist. Compare construction, SBA 504, SBA 7(a) and conventional options for your Homewood Suites franchise loan. Our conventional loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
Step 6: Run franchise and loan approvals together. Submit the franchise application and the loan package in parallel so neither one holds up the other.
Step 7: Close and execute. Fund your equity, complete construction or the PIP on schedule, and keep working capital available for ramp-up.
Homewood Suites Franchise Loan FAQs
How much does a Homewood Suites franchise cost?
The 2026 FDD estimates the total investment for a newly constructed 131-suite Homewood Suites at $23,757,245 to $34,728,465, excluding real property. Land or ground lease costs are additional.
What is the Homewood Suites franchise fee?
The application fee for a new development or conversion is $100,000 plus $400 for each additional guest room or suite over 150. A change of ownership costs $200,000 and re-licensing costs $100,000.
What royalty does Homewood Suites charge?
For new development or conversion, the royalty is 3.5% of Gross Rooms Revenue in the first year, 4.5% in the second year and 5.5% for the rest of the term. Changes of ownership and re-licensing pay 5.5%. The program fee is 2.5% of Gross Rooms Revenue.
How much liquidity or net worth do I need?
The FDD sections we reviewed do not set a fixed minimum. The franchisor reviews each owner group, and lenders expect enough liquidity to cover the equity injection and post-closing reserves.
Can I get an SBA loan for a Homewood Suites?
Yes. Homewood Suites by Hilton is listed on the SBA Franchise Directory. The applicant is not eligible if its management company is, or is affiliated with, the franchisor.
Can I finance FF&E separately from the building?
Yes. Suite furniture, kitchen packages, fitness and laundry equipment and technology can often be financed with equipment loans or leases, or included in the main loan.
Can I buy an existing Homewood Suites with financing?
Yes. Acquisitions are financed with SBA 7(a), SBA 504 or conventional loans. Expect a $200,000 change of ownership fee, the 5.5% royalty and a PIP.
Does the franchisor offer financing?
The FDD’s exhibits include a development incentive promissory note. Review Item 10 of the current FDD for any financing the franchisor offers, and plan to arrange construction and permanent loans with outside lenders.
How long is the franchise agreement?
Check Item 17 and the franchise agreement in the current FDD for the term, renewal and transfer terms. Lenders want the franchise term to cover the full loan term.
Is a Homewood Suites a good fit for a first-time hotel owner?
First-time owners can qualify, especially on acquisitions, when they bring strong liquidity, a credible plan and an experienced independent management company.
Does the FDD include financial performance representations?
Review Item 19 of the current FDD to see what it includes. For acquisitions, rely on the hotel’s actual operating statements and market reports.
Final Thoughts
Homewood Suites combines a decades-old extended-stay format with a substantial development budget and a fee structure that ramps up over the first years. Owners who budget for land on top of the FDD estimate, model the royalty step-ups, fund PIPs fully and choose management with financing in mind give their Homewood Suites franchise loan the best chance of approval.
US Professional Funding helps hotel developers, buyers and owners finance construction, acquisitions, PIPs, FF&E and working capital for branded hotels. Learn more about our franchise financing and hotel and motel financing programs.
