Red Roof Inn

Franchise fee: $12,000 to $27,000 based on property size (per-room fee structure).

Royalty: 5% of Gross Room Revenues. Red Roof also offers a 0.5% rebate on royalties for properties meeting brand standards — an incentive that effectively makes the rate 4.5% for compliant operators.

Additional fees: RediRewards Preferred Member Program (Red Roof's loyalty program) costs 4% of gross room revenues from loyalty program members (up to 5% maximum). Reservation Platform/PMS Monthly Fee: $490/month plus $3.85 per room per month — for a 100-room property, that's approximately $875/month.

Total investment: $6,007,500 to $8,899,600. This range is exclusively for new construction. If you're looking at an economy hotel conversion at lower cost, Red Roof's current franchise program does not reflect that option in the FDD investment table. The investment floor of $6M makes this one of the highest minimum-investment franchises in the portfolio.

Red Roof's Item 19 covers 584 franchised Red Roof Inn and Plus+ properties active for the full 2024 year. Key metrics:

Average RevPAR: $37.51. Median RevPAR: $35.14. Average ADR: $69.56. Average occupancy: 53.9%. 44.5% of properties exceeded average RevPAR.

For a 100-room property at average RevPAR ($37.51): annual gross room revenue ≈ $37.51 × 100 × 365 = $1,369,115. At 5% royalty, that's $68,456/year. Add the RediRewards fee (~4% on loyalty bookings, say 30% of rooms), the reservation platform fees (~$10,500/year for 100 rooms), and you're at roughly $100,000+ in total franchisor payments annually on a $1.4M revenue property.

The difference between average ($37.51) and median ($35.14) RevPAR is relatively small — the distribution is more consistent than many hotel brand systems, which is a positive reliability signal.

Red Roof's system grew from 606 to 619 units between 2023 and 2024 — modest growth of 13 properties. This is a healthy signal for an economy brand at this scale: growing while maintaining quality standards is difficult. The brand has been actively upgrading its property standards, as evidenced by the RevPAR rebate incentive for brand-standard-compliant properties.

Red Roof was acquired by Westmont Hospitality Group in 2022 from Aroundtown SA — another ownership transition in a brand that has changed hands multiple times. Ownership transitions in hotel franchise systems sometimes affect support quality and brand investment priorities in ways that take a few years to manifest in franchisee economics.

The $6M+ minimum investment for new construction is a substantial commitment in the economy hotel tier. At this investment level, your annual debt service on a $5M SBA loan (20-year term, 7.5% rate) runs approximately $476,000/year. A 100-room property at average RevPAR generating $1.37M in gross room revenue leaves roughly $890,000 for all operating costs — including labor, utilities, maintenance, franchisor fees, and your debt service. The math is tight.

The loyalty program fee (4% of RediRewards revenue) adds a meaningful additional royalty-like cost that's not immediately obvious from the base royalty rate. If 40% of your rooms are booked through loyalty program members, your effective royalty rate on those rooms is 9% (5% royalty + 4% loyalty program fee), not 5%. Read the complete fee schedule carefully before modeling returns.

Occupancy at 53.9% average is below the break-even threshold for many hotel operators (typically 55–65% depending on cost structure). If you land in the bottom quartile on occupancy, the math can deteriorate quickly — especially with $6M+ in debt service.