Understanding the home2 suites franchise cost is the first step toward becoming a successful hotel franchisee. Home2 Suites by Hilton has become one of the fastest-growing extended-stay brands in the hospitality industry, and for good reason. Investors and developers across the country are drawn to its proven model, strong brand recognition, and reliable demand from long-term guests. But with a total investment that can reach $25 million or more, securing the right financing is critical. This guide covers everything you need to know about franchise costs, loan options, qualification requirements, and how Crestmont Capital can help you fund your Home2 Suites franchise from start to finish.
In This Article
Home2 Suites by Hilton is a mid-scale, all-suite extended-stay hotel brand launched by Hilton Worldwide in 2009. Designed to serve guests staying five or more nights, the brand combines the comforts of a home-like environment with the reliability of Hilton's global hospitality network. Each suite features a fully equipped kitchen, flexible workspace, and pet-friendly accommodations, making it a preferred choice for business travelers, families in transition, contractors, and anyone who needs a comfortable place to stay for an extended period.
Since its founding, Home2 Suites has grown to more than 700 locations across the United States, Canada, and internationally, making it one of the most successful extended-stay brands Hilton has ever launched. The brand consistently earns top marks in guest satisfaction surveys and benefits from Hilton's massive loyalty program, Hilton Honors, which drives repeat bookings and strong occupancy rates even during softer travel periods.
For investors, Home2 Suites represents an opportunity to tap into one of the most resilient segments of the hospitality industry. Extended-stay hotels typically outperform traditional hotels during economic downturns because guests often include traveling healthcare workers, government contractors, and corporate relocation teams who book long stays regardless of broader economic conditions. According to U.S. Census Bureau data on housing and commercial real estate trends, demand for extended-stay accommodations has grown alongside increased workforce mobility and remote work adoption.
There are several reasons why savvy hotel investors choose Home2 Suites over competing extended-stay brands. Understanding these advantages can help you evaluate whether this franchise is the right fit for your investment strategy.
When you open a Home2 Suites, you immediately benefit from Hilton's worldwide reputation and its Hilton Honors loyalty program, which has more than 180 million members globally. This built-in customer base drives reservations from day one and reduces your marketing burden significantly compared to operating an independent hotel.
Home2 Suites properties are designed with operational efficiency in mind. The brand's modular construction approach allows developers to build faster and at lower cost per square foot compared to full-service hotels. Compact staffing models also keep labor costs manageable, which directly improves your net operating income and makes the property more attractive to lenders and investors alike.
Extended-stay hotels occupy a unique market position. Unlike traditional hotels that depend heavily on leisure travel, extended-stay properties draw from a diverse mix of demand generators: corporate housing programs, insurance relocation, government contracts, and project-based workers. This diversity means that even when leisure travel dips, extended-stay hotels often maintain solid occupancy rates.
According to data cited in multiple industry reports including analyses by Forbes, extended-stay hotels consistently report higher revenue per available room (RevPAR) compared to traditional limited-service hotels. Home2 Suites properties regularly rank among the top performers in this category, partly because longer average stays reduce the cost of guest turnover and housekeeping.
Many Home2 Suites franchisees own multiple properties. The operational consistency built into the brand's systems means that once you master one location, expanding to additional properties becomes far more straightforward. For investors looking to build a hospitality portfolio, Home2 Suites provides a repeatable, scalable model.
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Apply NowBefore you can secure financing, you need a clear picture of the full home2 suites franchise cost breakdown. Hilton provides detailed disclosure in its Franchise Disclosure Document (FDD), but here is a summary of the key cost categories you can expect.
The initial franchise fee for Home2 Suites by Hilton ranges from $60,000 to $80,000 depending on the size and configuration of your property. This fee grants you the right to operate under the Home2 Suites brand and access Hilton's reservation systems, training programs, and support infrastructure. The fee is paid upfront as part of your franchise agreement and is typically non-refundable.
As a Home2 Suites franchisee, you will pay ongoing fees based on your gross room revenue:
When budgeting for ongoing operations, plan for these fees to represent approximately 9-11% of gross revenue in total recurring franchise obligations. This is consistent with what franchisees pay for other Hilton brands such as those discussed in our guide to Homewood Suites by Hilton franchise loans.
The total investment to open a Home2 Suites franchise varies significantly based on location, property size, land costs, and construction conditions. Here is a general breakdown:
These figures reflect current construction costs and market conditions. Investors in high-cost real estate markets such as major metro areas or coastal cities should budget toward the higher end of these ranges, while developers in secondary and tertiary markets may find more favorable economics.
By the Numbers
Home2 Suites by Hilton - Key Franchise Facts
700+
Locations Worldwide
$60K
Initial Franchise Fee
5.5%
Royalty Fee of Gross Revenue
$8M+
Minimum Total Investment
Given the capital-intensive nature of hotel development, most franchisees rely on a combination of financing sources to fund their Home2 Suites project. Here are the primary options available to hotel investors today.
Commercial business loans are the most common financing vehicle for hotel development. These loans are secured by the real estate itself and typically cover 60-75% of the project's total cost. Terms generally range from 10 to 25 years with fixed or variable interest rates. Lenders evaluate the project based on the expected net operating income (NOI) of the completed hotel and the experience of the development team.
For new hotel builds, a construction loan bridges the gap between groundbreaking and opening day. These short-term loans (typically 12-24 months) fund construction draws as work progresses. Upon completion, the construction loan converts to a permanent commercial mortgage or is refinanced through another long-term lending vehicle. Construction lenders require detailed cost estimates, architectural plans, contractor agreements, and evidence of the franchise agreement with Hilton.
The SBA 7(a) loan program is one of the most powerful financing tools available to hotel franchisees. With loan amounts up to $5 million (and higher for certain projects), longer repayment terms, and government-backed guarantees, SBA 7(a) loans make it possible for franchisees to secure favorable terms even without a long track record in hotel ownership. These loans are particularly useful for funding the soft costs, working capital, and franchise fees associated with a new hotel project.
The SBA 504 loan program is specifically designed for the acquisition of commercial real estate and major fixed assets. Under the 504 structure, a Certified Development Company (CDC) provides up to 40% of the project cost, a conventional lender provides 50%, and the borrower contributes as little as 10% as a down payment. For hotel developers, the 504 program can significantly reduce the equity requirement for land and building acquisition.
Bridge loans provide short-term, interest-only financing that allows developers to move quickly on land acquisition or to cover gaps between construction completion and permanent financing. While bridge loans carry higher interest rates than conventional loans, they offer speed and flexibility that traditional lenders cannot match. Fast business loans in the bridge category can often close within days, which is critical in competitive real estate markets.
Mezzanine financing fills the gap between senior debt and equity in large hotel projects. Positioned behind the primary mortgage in the capital stack, mezzanine lenders take on more risk and charge higher interest rates, but they allow developers to reduce their equity contribution and increase their overall leverage. This type of financing is most appropriate for experienced hotel developers with a track record of successful projects.
The EB-5 Immigrant Investor Program allows foreign nationals to invest in U.S. projects in exchange for a path to permanent residency. Hotel developments in Targeted Employment Areas (TEAs) can qualify for EB-5 capital at investment thresholds as low as $800,000 per investor. For large Home2 Suites projects, EB-5 can serve as a meaningful equity or mezzanine component of the capital stack.
SBA loans are among the most attractive financing options for hotel franchise investors, particularly for first-time hotel owners and those without substantial existing hospitality assets. Understanding the mechanics of each SBA program will help you identify which option aligns best with your Home2 Suites project.
The SBA 7(a) loan program is the Small Business Administration's flagship lending product. For hotel franchisees, the key benefits include:
The SBA 504 program shines for hotel projects where the primary financing need is the land and building. Here is a typical structure for a Home2 Suites development:
This structure means a franchisee developing a $10 million hotel could potentially secure $9 million in combined debt financing with as little as $1 million in equity. The 504 loan's fixed rate on the CDC portion provides long-term rate certainty, which is especially valuable in fluctuating interest rate environments.
To qualify for SBA financing for your Home2 Suites project, you generally need to meet these criteria:
Working with a lender experienced in both SBA lending and hotel franchising is essential. Lenders who understand the Home2 Suites brand, Hilton's requirements, and the hospitality industry's financial metrics will be able to structure a loan package that meets both SBA guidelines and Hilton's development standards.
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Apply NowLenders evaluate hotel franchise loan applications through a combination of personal, business, and project-specific criteria. Preparing these elements in advance will significantly speed up your loan process and improve your chances of approval.
Most lenders and SBA programs require personal financial strength as a foundation for hotel loans. You will typically need:
While hotel industry experience is not always required, it significantly strengthens your loan application. Lenders look favorably on:
First-time hotel investors can often overcome a lack of direct experience by partnering with an established hotel management company and demonstrating strong financial credentials.
For a construction loan or commercial mortgage on a new Home2 Suites, you will need to provide extensive documentation including:
Lenders typically require hotel developers to inject 20-35% equity into the project. The exact percentage depends on the loan type, market conditions, and your experience level. First-time franchisees may face higher equity requirements, while experienced multi-property operators often secure more favorable loan-to-value ratios. Long-term business loans structured correctly can help you optimize your equity deployment across multiple properties.
Crestmont Capital is the #1 business lender in the United States, and we specialize in helping hotel franchise investors navigate the complex world of hospitality financing. Our team has deep experience with Hilton-branded hotels, including Home2 Suites, Hilton Garden Inn, Embassy Suites, and other brands in the Hilton portfolio.
When you work with Crestmont Capital for your Home2 Suites financing, you benefit from:
Crestmont Capital offers a full suite of financing products relevant to Home2 Suites investors:
To illustrate how these financing structures work in practice, here are three common scenarios that Home2 Suites franchisees encounter.
A developer in a mid-sized Midwest city wants to build a 100-room Home2 Suites on land they already own (valued at $1.2 million). Total estimated development cost including land, construction, FF&E, and soft costs is $12 million.
Financing structure: SBA 504 loan covering 90% of the project cost, with the developer contributing $1.2 million in equity (land value credited). The CDC portion provides $4.8 million at a fixed rate, a conventional first mortgage provides $6 million, and the developer contributes $1.2 million via land equity. Monthly debt service is manageable relative to projected NOI of $1.8 million per year at stabilized occupancy.
A hotel owner who already operates two Marriott-branded properties wants to add a Home2 Suites to their portfolio in a high-demand suburban market near a major corporate campus. Total project cost is $18 million.
Financing structure: Conventional commercial construction-to-permanent loan for $13.5 million (75% LTC) with a 25-year amortization period, plus a $1.5 million mezzanine component. The operator contributes $3 million in equity (approximately 17% of the project). Their existing hotel portfolio provides additional collateral support, allowing them to secure favorable interest rate terms.
An investor wants to acquire an existing 120-room Home2 Suites property that is stabilized at 78% occupancy and generating $2.4 million in annual revenue. The purchase price is $14 million.
Financing structure: Conventional commercial real estate loan for $10.5 million (75% LTV) with a 10-year term and 25-year amortization. The investor provides $3.5 million in equity. The loan is sized based on the property's DSCR (debt service coverage ratio) of 1.35x, which meets most lenders' minimum requirements for hotel acquisitions.
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Every Home2 Suites project is different. Talk to a Crestmont Capital specialist and get a financing plan tailored to your goals.
Apply NowThe total cost to open a Home2 Suites franchise ranges from approximately $8 million to $25 million or more, depending on your market, property size, and local construction costs. This includes land, construction, FF&E, the franchise fee, pre-opening costs, and working capital reserves. Markets with higher real estate values will push costs toward the upper end of this range.
2. What is the Home2 Suites franchise fee?The initial franchise fee for Home2 Suites by Hilton is $60,000 to $80,000 depending on the property configuration. This is a one-time fee paid at the beginning of the franchise agreement. Ongoing royalty fees of 5.5% of gross room revenue and a program services contribution of approximately 4% also apply throughout the term of your franchise agreement.
3. Can I get an SBA loan for a Home2 Suites franchise?Yes. Home2 Suites franchises can qualify for SBA 7(a) and SBA 504 loans. SBA 7(a) loans offer up to $5 million and can cover franchise fees, working capital, and construction costs. SBA 504 loans are ideal for financing land and building acquisition with as little as 10% equity. Working with an experienced hotel lender like Crestmont Capital will help you identify which SBA program is the best fit for your project.
4. How much equity do I need to invest in a Home2 Suites project?Most lenders require 20-35% equity for hotel development projects. With SBA 504 financing, the equity requirement can be as low as 10% of total project cost. The exact amount depends on your experience level, the loan program you use, and the specific lender's requirements. First-time hotel investors typically face higher equity requirements than seasoned operators.
5. What credit score do I need to qualify for a hotel franchise loan?Most lenders look for a personal credit score of at least 650-680 for SBA loans and 680+ for conventional commercial real estate loans. However, credit score is just one factor. Lenders also evaluate your net worth, liquidity, industry experience, and the strength of your project's financial projections. A lower credit score may still qualify if other aspects of your application are very strong.
6. How long does it take to get financing for a Home2 Suites franchise?The timeline varies by loan type. SBA loans typically take 60-90 days from application to closing. Conventional commercial real estate loans can take 45-75 days. Bridge loans can close in as few as 2-3 weeks. To minimize delays, prepare all your documentation in advance: franchise agreement, construction budget, architectural plans, personal financial statements, and market feasibility study.
7. Do I need hotel experience to qualify for a Home2 Suites franchise loan?Hotel experience is not strictly required, but it strengthens your application significantly. Lenders and Hilton both look more favorably on franchisees with direct hospitality industry experience. If you do not have hotel-specific experience, you can offset this by hiring an experienced hotel management company to operate the property and by demonstrating strong financial capacity and business acumen in other industries.
8. What is the difference between SBA 7(a) and SBA 504 for hotel financing?SBA 7(a) is more flexible and can fund a wider range of costs including franchise fees, working capital, and equipment. SBA 504 is specifically designed for major fixed assets like real estate and is structured as a partnership between a conventional lender, a Certified Development Company, and the borrower. SBA 504 often provides lower rates on the CDC portion but cannot fund soft costs or working capital. Many hotel projects use both programs in combination or choose based on which cost category dominates.
9. Can I finance an existing Home2 Suites acquisition rather than new construction?Yes. Acquiring an existing, operating Home2 Suites property is often easier to finance than new construction because lenders can evaluate actual historical revenue and occupancy data rather than projections. Conventional commercial real estate loans, SBA 7(a) loans, and bridge loans are all available for acquisition financing. Lenders will size the loan based on the property's DSCR (debt service coverage ratio) and appraised value.
10. What documents do I need to apply for a Home2 Suites franchise loan?Key documents include: signed franchise agreement from Hilton, architectural and engineering plans, construction cost estimates and contractor bids, market feasibility study, 3-5 year pro forma financial projections, personal financial statements, personal and business tax returns for the past 3 years, entity formation documents, and environmental and title reports on the property. Having these organized before approaching lenders will dramatically speed up the approval process.
11. What is the typical loan term for a Home2 Suites hotel loan?Commercial hotel loans typically have terms of 5-25 years depending on the loan type. SBA 504 loans can amortize over 20-25 years. SBA 7(a) real estate loans can have terms up to 25 years. Conventional commercial mortgages often have shorter terms (5-10 years) with longer amortization schedules (20-25 years) and balloon payments at the end of the initial term. Construction loans are short-term (12-24 months) and convert to permanent financing upon completion.
12. How does Hilton's approval process work for new franchisees?Hilton's franchise approval process includes an application review, background and financial checks, site evaluation, and review of your development plan. Hilton wants to ensure that new franchisees have the financial resources to complete and operate the property successfully. Hilton also evaluates the proposed site for market viability, including proximity to demand generators and any potential conflict with existing Hilton-branded properties in the area. Approval typically takes several months and may require multiple rounds of review.
13. How does Home2 Suites compare to other extended-stay brands for investors?Home2 Suites competes primarily with brands like Hyatt House, Staybridge Suites (IHG), and Residence Inn (Marriott). Compared to these competitors, Home2 Suites is often praised for its more modern design aesthetic, lower construction costs per key due to its modular approach, and the strength of Hilton's distribution and loyalty platform. Investors who have compared multiple extended-stay brands often cite Home2 Suites' combination of brand quality and construction efficiency as key advantages. For a comparison with the sister brand, see our guide to Homewood Suites franchise financing.
14. What interest rates can I expect on a Home2 Suites franchise loan?Interest rates on hotel franchise loans depend on the loan type, your creditworthiness, and prevailing market rates. SBA 7(a) loans typically carry rates of prime plus 2.25-2.75% for loans over $350,000. SBA 504 CDC debenture rates are fixed and tied to 10-year U.S. Treasury rates. Conventional commercial loans are priced based on SOFR or Treasury benchmarks plus a spread that reflects the lender's risk assessment. Bridge loans carry higher rates, often 8-12%+ depending on the deal structure. Rates change frequently, so it is best to get current quotes from multiple lenders.
15. How can Crestmont Capital help me finance my Home2 Suites franchise?Crestmont Capital is the #1 business lender in the U.S. and specializes in hotel franchise financing. We work with hundreds of lenders to find the right loan structure for your Home2 Suites project, whether that is an SBA loan, commercial real estate loan, bridge loan, or a combination of programs. Our advisors understand the Hilton franchise process, hotel financial metrics, and what lenders need to see to approve a hotel development loan. We handle the heavy lifting so you can focus on your project. Start by applying online at offers.crestmontcapital.com/apply-now.
Investing in a Home2 Suites by Hilton franchise is a serious capital commitment, but it is also an opportunity to build a profitable, resilient hospitality asset backed by one of the world's most recognized hotel brands. Understanding the full scope of the home2 suites franchise cost - from the initial franchise fee to total development investment - is essential to making an informed decision and securing the right financing.
The good news is that a range of financing tools are available to hotel franchise investors at every stage of the development journey. Whether you are pursuing an SBA loan for your first hotel, a conventional commercial mortgage to expand an existing portfolio, or a bridge loan to move quickly on an acquisition, the key is working with a lender who understands the hospitality industry and can structure a deal that sets you up for long-term success.
Crestmont Capital has helped countless hotel franchise investors navigate this process. Our advisors understand Hilton's requirements, hotel financial metrics, and the full spectrum of lending products available to you. We are here to help you from your first application through funding and beyond.
Ready to take the next step? Apply online today and connect with a Crestmont Capital hotel financing specialist.
This content is provided for general educational purposes only and does not constitute financial, legal, or investment advice. Loan terms, rates, and eligibility requirements vary by lender and are subject to change. Consult a qualified financial advisor or lender before making any investment decisions.