Under our franchise agreements, we authorise a third-party hotel operator or property owner to operate a hotel under a selected brand in our portfolio (currently only Radisson SAS or Park Inn). Accordingly, under such agreements, we neither own, lease nor manage the hotel. We derive revenue from a brand royalty or licensing fee which, under most of our franchise agreements, is based on a percentage of total room revenue generated by a hotel. In addition, we collect marketing fees based on total room revenue and reservation fees based on the number of reservations made.
To maintain brand image and value, franchisees are obligated to meet specified brand standards. A franchisee also has access to our reservations system and is provided with marketing support and other know-how for operating the hotel.
The duration of our franchise agreements vary, but they are typically for a term of 10 years or longer.