How to Finance an Element by Marriott Franchise: Green Suites
By Chris Cornella
An Element by Marriott franchise loan funds a hotel that combines extended-stay suites with a sustainability mandate built into the brand standards. That mix of kitchens in every room, a saline pool, energy certification requirements and a construction budget measured in tens of millions of dollars shapes how the deal is underwritten from the first conversation with a lender.
Below: Element’s fees and investment from the current disclosure document, how lenders view new-build and conversion projects, and where SBA and conventional loans fit.
US Professional Funding is not affiliated with, sponsored by or endorsed by Element by Marriott; 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 approval. Nothing here is legal, tax or investment advice, and owners should review the current disclosure document and franchise agreement with a qualified franchise attorney and accountant.
Element by Marriott Franchise Loan at a Glance
- Franchisor: MIF, L.L.C., a Delaware limited liability company based in Bethesda, Maryland, according to the 2026 Franchise Disclosure Document (FDD) issued March 31, 2026.
- Application fee: $75,000 plus $500 per guestroom over 150 rooms for a new-to-system Element hotel, including a conversion of a hotel not affiliated with the system.
- Royalty (franchise fee): 5.5% of gross room sales.
- Program services contribution: 2.75% of gross room sales (including 1% to the marketing fund), plus $10,000 per year and $220 per guestroom per year.
- Estimated initial investment, new build: $15,617,010 to $37,057,510 for an 80 to 110 room hotel and $22,288,310 to $46,127,710 for a 120 to 150 room hotel, excluding real estate, insurance and contingencies.
- System size: 99 franchised Element hotels operating in the U.S. and Canada at the end of 2025, plus three operated by affiliates.
- SBA Franchise Directory: listed under code S2524, with a note about third-party management agreements.
What Is Element by Marriott?
Element is a select-service, extended-stay hotel brand. According to the 2026 FDD, the current franchisor has offered Element franchises since March 2017, and affiliated companies franchised the brand from 2006 and have owned and managed Element hotels since that year.
The prototype. The FDD describes an Element hotel as typically having approximately 90 to 175 studios, standard rooms and one-bedroom suites, usually in urban or suburban markets. Guestrooms generally include a fully equipped kitchen, a living area, working and dining areas and a shower, and the public space usually centers on communal “Studio Commons” areas.
Required amenities. The brand standards call for a complimentary breakfast (Rise), an evening reception (Relax), a retail pantry (Restore), a fitness center (Motion) and a saline pool. Bar and other food options can vary by location.
Sustainability as a standard. Element hotels must obtain sustainability certifications and offset 70% of their energy use through renewable energy credits, according to the FDD. For a borrower, that means green building features and ongoing certification costs are part of the brand, not optional upgrades.
Why lenders view Element the way they do. Extended-stay hotels can attract longer guest stays and steadier occupancy patterns than many transient hotels, which lenders often view favorably. At the same time, kitchens in every room, a pool and sustainability requirements raise the construction budget, and the FDD notes the lodging business may be seasonal and is highly competitive. Lenders weigh both sides.
Element by Marriott Franchise Costs
Application fee. The 2026 FDD sets the application fee for a new-to-system Element hotel at $75,000 plus $500 for each guestroom over 150. For an existing Element hotel, or a conversion of a hotel already managed by the franchisor or an affiliate, the fee is the greater of $150,000 or $500 per guestroom. If an application is withdrawn or not approved, the fee is refunded less $10,000 per unapproved hotel and outside counsel fees.
Land and construction. The Item 7 totals exclude real estate, so land acquisition or ground lease costs come on top of the published range. Construction is the largest single cost in a new Element, and the brand’s kitchens, pool and sustainability features all flow into the hard-cost budget.
Furniture, fixtures and equipment. Every guestroom kitchen, studio furnishing and public-space element must meet brand standards. The FDD describes procurement services from affiliates, with a procurement charge of the greater of $5,000 or about 4.5% to 5% of the cost of products and services purchased through that channel.
Technology and pre-opening. The FDD estimates $67,000 to $124,000 for property management, reservation, revenue management and related systems before opening, and approximately $75,000 for pre-opening training and services.
Total investment. The 2026 FDD estimates a total initial investment, excluding real estate and related costs, insurance and contingencies, of:
- $15,617,010 to $37,057,510 for a newly constructed 80 to 110 room prototype hotel
- $22,288,310 to $46,127,710 for a newly constructed 120 to 150 room prototype hotel
- Approximately $217,000 to $293,500 of the total is payable to the franchisor or its affiliates
The full Item 7 table breaks these totals into the application fee, design and construction, FF&E, operating supplies, technology, pre-opening training and additional funds. Use it as the starting point for your construction budget, and expect lenders to compare it with your contractor’s estimate.
Conversions. Converting an existing hotel to Element carries a different cost structure. The FDD lists conversion support and training of $35,000 to $75,000 for most conversions and a property improvement plan (PIP) fee of $12,000 for conversions, transfers and relicensing.
Ongoing Fees and Your Element by Marriott Franchise Loan
Royalty. Element franchisees pay a franchise fee of 5.5% of gross room sales each month, according to the 2026 FDD.
Program services contribution. On top of the royalty, owners pay 2.75% of gross room sales, including 1% to the marketing fund, plus $10,000 per year and $220 per guestroom per year.
Loyalty program. The FDD lists a loyalty charge of 1.9% of qualifying revenue from loyalty members, reduced to 1.8% through December 2027, plus a charge on qualifying event revenue.
How lenders factor these costs in. Lenders underwrite the hotel’s net operating income after all brand fees. Because the royalty and program services contribution are tied to room sales while the per-room charge is fixed, a lender will model both against conservative occupancy and rate assumptions. Fees that rise with revenue reduce the cushion available for debt service, so a realistic projection is essential.
Franchisor Requirements for New Owners
The franchisor does not publish a fixed net worth or liquidity threshold on the materials reviewed for this article. Instead, each hotel goes through an application and approval process that looks at the site, the market, the ownership group and the proposed management.
- Application and approval: each proposed hotel is approved individually, with the application fee paid up front.
- Design review: the FDD describes design and construction review, including charges for reviewing a proposed interior design firm.
- Brand standards: the Element amenities and sustainability certification requirements apply from opening.
- Training: pre-opening training and services are required before the hotel opens.
- Management: owners either self-manage or hire a qualified management company, which matters for SBA eligibility (see below).
Lenders will ask for the franchisor’s approval letter or franchise agreement before an Element by Marriott franchise loan closes, so align the franchise application and loan timeline early.
Ways to Own an Element by Marriott Hotel
New construction. Most Element growth comes from purpose-built hotels. A new build involves land, entitlements, construction financing and a lease-up period, and lenders underwrite it on feasibility and projections. Our hotel start-up financing page explains how we approach ground-up projects.
Conversion of an existing hotel. An owner may convert a hotel from another flag or an independent property if it can meet the Element standards. Conversion budgets center on the PIP, which can include adding kitchens, reworking public space and meeting sustainability requirements. Read more about financing a property improvement plan.
Buying an existing Element. An acquisition gives lenders historical operating statements to underwrite. The buyer pays the application fee for an existing hotel and typically receives a PIP. See our options for hotel acquisition financing.
Financing Options for an Element by Marriott Franchise
SBA 7(a) loans. The SBA 7(a) loan program can fund land, construction, equipment and working capital for an eligible hotel. Because Element projects often run well into eight figures, a 7(a) loan usually covers part of the capital stack rather than the whole project.
SBA 504 loans. An SBA 504 real estate loan is designed for owner-occupied commercial real estate and long-lived fixed assets, which fits hotel land and buildings. It pairs a senior loan with a second-position SBA-backed portion and the owner’s equity.
Conventional loans. Many Element projects use conventional business loans or construction loans that convert to permanent financing once the hotel stabilizes. These loans can handle larger project sizes and are structured around the hotel’s projected and actual cash flow.
Equipment and FF&E financing. Guestroom kitchen packages, studio furniture, fitness equipment, pool systems and technology can sometimes be financed separately from the building.
Working capital and lines of credit. New hotels need funds for payroll, supplies and debt service while occupancy ramps up. Extended-stay hotels also carry pantry inventory and breakfast and evening reception costs. See our hotel working capital page.
Seller financing on acquisitions. A seller may carry part of the price on a hotel sale. Any seller note must be acceptable to the senior lender and is typically subordinate to it, and loan programs may limit how a seller note is structured.
SBA Loans for Element by Marriott Franchisees
SBA lenders generally require a franchise brand to appear on the SBA Franchise Directory before they can make an SBA-guaranteed loan to one of its franchisees. A listing means the franchise relationship has been reviewed for eligibility; it does not approve any borrower.
Element by Marriott is listed. The brand appears on the SBA Franchise Directory under code S2524.
What the directory note means. The listing carries a note about management agreements. If the owner also operates the hotel under a management agreement with a third party, the lender must review that agreement under SBA rules to decide whether the owner and the management company are affiliated. The applicant is not eligible if the management company is, or is affiliated with, the franchisor. In plain terms: hiring an independent management company can work, but having the franchisor or its affiliate manage the hotel rules out SBA financing.
SBA application tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change, so most Element projects combine SBA financing with other capital. Prepare a feasibility study, the franchise approval, construction budget and management agreement early. Our article on SBA loans for hotels covers the process in more detail, and the SBA loan calculator can help with early planning estimates, which are not an offer or approval.
How Lenders Evaluate an Element by Marriott Deal
Personal credit and financial history. Lenders review credit, tax returns and personal financial statements for each significant owner and usually require personal guarantees.
Net worth and liquidity. With eight-figure project costs, lenders look for sizable equity plus reserves for overruns and lease-up. Our hotel loan requirements article explains what lenders typically ask for.
Hospitality experience. Lenders favor ownership groups with hotel operating history or an experienced management company, especially for extended-stay operations.
Feasibility and projections. A third-party feasibility study should address extended-stay demand drivers in the market, competitive supply and a realistic ramp-up period. Projections should reflect the royalty, program services contribution and loyalty charges.
The FDD and franchise agreement. Lenders review the term, termination rights, transfer conditions and any comfort letter from the franchisor. Our guide to how lenders read a Franchise Disclosure Document explains which sections matter most.
Site and real estate. Land control, zoning, construction contracts and appraisals all matter.
Historical financials on acquisitions. For an existing Element, expect to provide several years of operating statements, market performance reports and the PIP.
Extended-Stay Design, Sustainability and FF&E
Element’s room design drives both cost and collateral. Every guestroom kitchen carries appliances, cabinetry and plumbing that a standard hotel room does not. Public space includes a breakfast and reception area, a pantry, a fitness center and a saline pool.
Sustainability budget. Certification requirements and the 70% energy offset through renewable energy credits create both up-front design costs and ongoing operating expenses. Lenders will want to see these in the construction budget and in the operating projections.
Replacement reserves. Kitchen appliances and furnishings wear on a cycle, so an Element by Marriott franchise loan is usually paired with an FF&E reserve for replacements and future renovations.
Multi-Unit Growth and Development
Each Element hotel requires its own application and approval, and each typically has its own financing.
Financing additional hotels. Once the first hotel is stabilized, its cash flow and the owner’s track record strengthen the next request. Some owners refinance a stabilized hotel to free up equity for the next project.
Real-World Scenarios
A first Element for a regional developer. A developer with several midscale hotels plans a new Element near a corporate campus. The group uses a conventional construction loan with a permanent takeout, keeps reserves for lease-up and hires an independent management company.
A conversion with a PIP. An owner converts an older extended-stay hotel to Element. The financing package covers the PIP, including kitchen upgrades, public-space work and sustainability improvements, plus working capital through the transition.
Buying an existing Element. A buyer acquires a stabilized Element using an SBA 504 structure for the real estate and a separate working capital line, after confirming the management agreement meets the directory note.
Common Mistakes to Avoid
- Treating the Item 7 range as the full budget when it excludes real estate, insurance and contingencies
- Underestimating the cost of kitchens, the pool and sustainability certification
- Planning on SBA financing with a management company affiliated with the franchisor
- Projecting occupancy without a realistic lease-up period
- Leaving out the program services contribution and loyalty charges from projections
- Skipping a PIP reserve when buying or converting a hotel
For more pitfalls, read the hotel loan mistakes owners should avoid.
Next Steps to Finance Your Element by Marriott Franchise
Step 1: Study the FDD. Review Items 5, 6, 7 and 17 of the current FDD with a franchise attorney and accountant.
Step 2: Secure the site or the hotel. Get land control or a purchase agreement, and order a feasibility study focused on extended-stay demand.
Step 3: Build the budget. Combine the Item 7 estimate with contractor pricing, land costs, contingencies and reserves.
Step 4: Choose management. Decide whether you will self-manage or hire an independent management company, and confirm the arrangement fits SBA rules if you plan to use SBA financing.
Step 5: Talk with a financing specialist. Compare SBA 7(a), SBA 504 and conventional structures for your project size.
Step 6: Apply for franchise approval and financing together. Coordinate the franchise application, loan application and construction schedule.
Step 7: Close and open. Fund construction, complete pre-opening training and keep working capital for the ramp-up.
Element by Marriott Franchise Loan FAQs
How much does it cost to build an Element hotel?
According to the 2026 FDD, a newly constructed 80 to 110 room hotel is estimated at $15,617,010 to $37,057,510, and a 120 to 150 room hotel at $22,288,310 to $46,127,710. These totals exclude real estate, insurance and contingencies.
What is the Element application fee?
For a new-to-system hotel, the application fee is $75,000 plus $500 per guestroom over 150. For an existing Element hotel, it is the greater of $150,000 or $500 per guestroom.
What royalty does Element charge?
The franchise fee is 5.5% of gross room sales. Owners also pay a program services contribution of 2.75% of gross room sales plus $10,000 per year and $220 per guestroom per year.
Is Element by Marriott eligible for SBA loans?
Yes. The brand is on the SBA Franchise Directory under code S2524. The applicant is not eligible if the hotel’s management company is, or is affiliated with, the franchisor.
What net worth do I need?
The franchisor does not publish a fixed threshold in the materials reviewed here. Lenders and the franchisor will look at your equity, liquidity and hotel experience relative to the size of the project.
Can I convert an existing hotel to Element?
The FDD contemplates conversions, which carry conversion support and training charges and a PIP. The property must be able to meet Element’s room, amenity and sustainability standards.
Can I buy an existing Element hotel?
Yes, subject to franchisor approval. The buyer pays the application fee for an existing hotel and usually receives a PIP, and lenders underwrite the hotel’s historical results.
Does the franchisor offer financing?
Review Item 10 of the current FDD for any financing the franchisor offers. Most owners arrange construction and permanent financing through outside lenders.
How long is the franchise term?
Term and renewal provisions are set out in Item 17 and the franchise agreement. Lenders typically want the remaining franchise term to extend beyond the loan maturity.
Does the FDD include financial performance information?
Check Item 19 of the current FDD to see whether it includes financial performance representations, and rely on a feasibility study and actual operating statements for your own projections.
Can a first-time hotel owner get an Element by Marriott franchise loan?
It is possible, but given the project size, lenders generally look for strong equity, an experienced partner or an established management company.
Final Thoughts
Financing an Element hotel means planning for a large, design-intensive extended-stay project with sustainability standards built in. Owners who budget beyond the Item 7 range, choose management that fits their financing and approach lenders with a strong feasibility study put themselves in the best position to close.
US Professional Funding helps hotel owners and franchise buyers finance construction, acquisitions, renovations and working capital. Learn more about our franchise financing and hotel and motel financing solutions.
