Joining the Sheraton brand - one of Marriott International's most recognized upscale hotel flags - represents one of the most prestigious opportunities in the hospitality industry. With a global portfolio spanning more than 400 properties and a legacy stretching back to 1937, Sheraton carries the kind of brand equity that fills rooms and commands premium rates. But acquiring and financing a Sheraton franchise is no small undertaking. Total investment costs can range from $15 million to well over $80 million, and Marriott's qualification requirements are among the most rigorous in the hotel sector.
Whether you are an experienced hotel developer looking to add a Sheraton flag to your portfolio or a hospitality entrepreneur exploring your first full-service brand affiliation, understanding every dimension of the financing landscape is essential. This guide covers Sheraton franchise costs, loan options, qualification requirements, and how Crestmont Capital helps hotel investors secure the funding they need to bring their project to life.
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Apply Now - Free ConsultationSheraton Hotels and Resorts is a full-service, upscale hotel brand owned by Marriott International - the largest hotel company in the world by number of properties. Founded in 1937, Sheraton was one of the first hotel chains to establish a global footprint, and today it operates in more than 70 countries across six continents. The brand targets business and leisure travelers who expect premium amenities, consistent service standards, and prime locations in major urban centers, airports, and resort destinations.
When you acquire a Sheraton franchise, you are licensing the right to operate a hotel under the Sheraton name and to participate in Marriott's Bonvoy loyalty program - which counts over 200 million members. That access to Marriott's global distribution system, corporate accounts, and loyalty base is a significant driver of occupancy and revenue. Properties gain immediate credibility and a reservation pipeline that independent hotels simply cannot replicate on their own.
Sheraton franchise agreements are issued by Marriott International under a franchise disclosure document (FDD). Like all Marriott brands, Sheraton has strict product improvement plan (PIP) requirements for both new construction and conversion properties. Whether you are building from the ground up or converting an existing full-service hotel, you will need to meet Sheraton's design standards, technology requirements, food and beverage minimums, and staffing benchmarks before opening day.
The franchise model is straightforward in concept: you own and operate the property while paying Marriott ongoing royalty fees and marketing contributions in exchange for brand affiliation, reservation system access, and loyalty program participation. The brand does not typically manage properties directly under franchise agreements - that responsibility stays with you or a management company you appoint.
Understanding the full cost structure of a Sheraton franchise is critical before approaching any lender. Costs fall into two broad categories: upfront one-time fees and ongoing percentage-based fees paid throughout the term of the franchise agreement.
Marriott charges an initial franchise fee for the right to use the Sheraton brand. For Sheraton properties, this fee typically ranges from $75,000 to $150,000, depending on the number of rooms and whether the property is a new construction or conversion. This fee is paid at the time of signing the franchise agreement and is generally non-refundable.
Royalty fees are ongoing and are calculated as a percentage of gross room revenue. For Sheraton, royalty fees typically run approximately 5.5% to 6% of gross room revenue per year. On a 250-room Sheraton generating $10 million in annual room revenue, that translates to $550,000 to $600,000 in annual royalties paid to Marriott. These fees are non-negotiable and are embedded in the franchise agreement.
In addition to royalties, franchisees pay into Marriott's centralized marketing and system programs. These fees cover national advertising campaigns, the Marriott Bonvoy loyalty program, the central reservations system, and brand-level technology platforms. Marketing and program fees for Sheraton typically run 3% to 4% of gross room revenue, bringing the combined ongoing fee load to roughly 9% to 10% of gross room revenue per year.
Total investment in a Sheraton franchise varies enormously based on whether you are building new or converting, the size of the property, and the market. Key cost categories include:
For a 200-room Sheraton in a mid-tier urban market, all-in costs (land, construction, FF&E, pre-opening) typically fall in the $25 million to $60 million range. Premium markets like New York, Los Angeles, or Miami can push total investment well above $80 million for a full-service property. According to Statista data on the U.S. lodging industry, full-service hotel RevPAR (revenue per available room) has shown consistent strength in urban and resort markets, supporting the financial case for premium brand affiliation.
Sheraton franchise agreements typically run 20 to 30 years. During that time, Marriott can require property improvement plans (PIPs) at the time of sale or refinancing. Budget for PIP costs when modeling your total investment and loan structure. PIPs can range from several hundred thousand dollars to tens of millions depending on the scope of required upgrades.
Hotel franchise financing is a specialized lending category. Because Sheraton properties represent substantial capital investments - often $20 million to $80 million or more - most investors use a combination of equity and debt to fund acquisition or development. Here are the primary financing options available to Sheraton franchisees.
The SBA 504 loan program is one of the most commonly used tools for hotel acquisitions and construction. The program provides long-term, fixed-rate financing for major fixed assets - including real estate and construction. A typical SBA 504 deal is structured as:
For hotel deals, SBA 504 loans can reach $5.5 million to $5 million per CDC debenture, with conventional lender portions typically making up the balance. The fixed rate on the SBA portion is pegged to Treasury rates and is often below market, making this a cost-effective structure for stabilized acquisitions. Crestmont Capital's SBA loan specialists can help you navigate the 504 program for hotel projects.
The SBA 7(a) program is more flexible than the 504 - it can be used for a broader range of purposes including working capital, equipment, and business acquisition in addition to real estate. Maximum loan amounts reach $5 million, with terms up to 25 years for real estate. Interest rates are variable and tied to the prime rate plus a spread. The 7(a) program is particularly useful for smaller hotel acquisitions, franchise fee financing, and FF&E funding when combined with other debt.
For larger Sheraton projects, commercial real estate loans from banks, life insurance companies, or debt funds are often the primary source of acquisition or construction financing. These loans typically offer:
Life insurance company lenders are particularly active in the full-service hotel space and often offer the most competitive long-term fixed rates for stabilized, branded properties. CMBS (commercial mortgage-backed securities) lenders are another option for larger transactions.
Several national and regional banks specialize in hospitality lending - including lenders with specific programs for Marriott-branded properties. These lenders understand hotel operations, underwrite to hospitality-specific metrics (RevPAR, ADR, occupancy, DSCR), and can structure loans more creatively than generalist commercial banks. Some franchise-focused lenders have preferred relationships with Marriott that streamline the approval process.
For new construction Sheraton projects or value-add conversions, bridge loans and construction loans provide the short-term financing needed during the development phase. These loans typically carry higher interest rates (often floating at SOFR + 300-500 basis points) and are designed to be refinanced into permanent financing once the property stabilizes. Construction loans typically advance funds in draws tied to project milestones.
When the gap between senior debt capacity and required equity is too large, developers often turn to mezzanine debt or preferred equity to fill the capital stack. Mezzanine lenders sit between senior debt and common equity, accepting higher risk in exchange for higher returns (typically 10% to 15%+ on an annualized basis). This structure allows developers to preserve more of their own equity capital while still achieving project viability.
According to Forbes, hotel loans typically require higher equity contributions (20-35%) compared to other commercial real estate because of the operational complexity and income volatility of the hospitality sector. Branded properties like Sheraton generally command better loan terms than independent hotels due to lower perceived risk.
Hotel developers reviewing financing options for a Sheraton franchise investment.
From SBA 504 to commercial real estate loans - Crestmont Capital structures financing for full-service hotel projects of all sizes.
Get Your Loan OptionsQualifying for financing on a Sheraton franchise involves satisfying two separate sets of requirements: Marriott's franchise qualification criteria and the lender's underwriting standards. Both are rigorous, and both must be met before your project can proceed.
Marriott International has some of the most demanding franchisee qualification standards in the hospitality industry. To be approved as a Sheraton franchisee, applicants typically need to demonstrate:
Marriott reviews franchise applications through its brand leadership team and may require a development agreement in addition to the franchise agreement for new construction projects. The approval process can take several months and may involve multiple rounds of review and revision.
Hotel lenders have specific underwriting standards that differ from typical commercial real estate lending. Key metrics lenders evaluate include:
Most hotel lenders require equity contributions of 25% to 35% of total project cost for Sheraton-level full-service properties. For a $40 million project, that means $10 million to $14 million of equity must come from the developer. This equity can come from personal funds, equity partners, EB-5 investors, or other sources - but it must be documented and verified before loan closing.
Crestmont Capital has extensive experience working with hotel developers and franchise investors across all major brands - including Marriott-affiliated properties like Sheraton. Unlike generalist business lenders, Crestmont understands the hospitality lending landscape and knows how to structure financing packages that work for complex, capital-intensive hotel projects.
Here is how Crestmont Capital adds value at every stage of your Sheraton franchise financing journey:
Before you approach Marriott or a conventional bank, Crestmont works with you to structure your capital stack. We analyze your equity position, projected cash flows, and financing needs to identify the optimal combination of senior debt, mezzanine, and equity. Getting the capital structure right from the beginning can save you hundreds of thousands of dollars in unnecessary interest costs and help you close faster.
Crestmont has relationships with lenders who specialize in hospitality financing - including Marriott-preferred bank lenders, life insurance company lenders, CMBS lenders, and SBA-preferred lenders with hotel expertise. We match your project to the right lender based on project size, stage, market, and your financial profile - saving you weeks of shopping and multiple credit inquiries.
SBA 504 and 7(a) loans can be powerful tools for hotel franchise financing, but the application process is complex. Crestmont's SBA loan team handles documentation preparation, lender coordination, and SBA submission - giving your application the best possible chance of approval. We know what SBA underwriters look for in hotel deals and how to present your project in the strongest possible light.
A Sheraton-level property requires significant investment in hotel-grade furniture, fixtures, and equipment - from commercial kitchen equipment to laundry systems to audiovisual technology for meeting rooms. Crestmont's equipment financing programs allow you to fund FF&E separately from real estate debt, preserving cash flow and simplifying your overall capital structure.
Even well-capitalized hotel developers benefit from access to flexible working capital during the ramp-up period after opening. A business line of credit from Crestmont Capital can cover payroll, inventory, marketing expenses, and operational gaps while your property reaches stabilized occupancy. Lines of credit are revolving, so you only pay interest on what you draw.
To explore all available business funding options for your hotel project, visit our comprehensive small business loans page or read our detailed guide to hotel business loans.
To make the financing landscape more concrete, here are three representative scenarios illustrating how different investors might approach Sheraton franchise financing.
Project: A 175-room independent full-service hotel in a secondary market being converted to a Sheraton Select flag. Total project cost: $22 million ($15M acquisition + $7M PIP and renovation).
Capital Stack:
Key considerations: The SBA 504 structure allowed the developer to preserve equity while accessing below-market fixed rates on the CDC debenture portion. The regional bank lender had prior experience with Marriott brand conversions and was comfortable with the PIP budget. DSCR at stabilization projected at 1.38x.
Project: A 300-room new-construction full-service Sheraton in a major metropolitan market. Total project cost: $75 million.
Capital Stack:
Key considerations: At $75 million total cost, the project was above SBA program limits. The developer used mezzanine debt to reduce required equity while keeping the senior loan at a manageable LTV. Upon stabilization, the construction loan will be refinanced into a CMBS or life company permanent loan. According to CNBC reporting on hotel industry investment, full-service urban hotels continue to attract institutional capital in primary markets due to their strong ADR and group business profiles.
Project: An experienced hotel group with five select-service properties seeks to acquire an existing Sheraton in a resort market. Acquisition price: $35 million (150 keys).
Capital Stack:
Key considerations: The borrower's track record with other Marriott-affiliated brands (a Courtyard and two Fairfield properties) made lenders significantly more comfortable. The long-term business loan for FF&E allowed the group to meet Marriott's brand standards without straining the real estate loan. The group had also worked with Crestmont on the earlier Courtyard by Marriott franchise loan and returned for the Sheraton acquisition. Bloomberg has reported that Marriott's branded hotels consistently outperform independent properties during economic downturns due to loyalty program support and brand recognition - a key factor in lender confidence for Marriott-affiliated projects.
Data reflects typical ranges as of 2026. Individual projects vary. Contact Crestmont Capital for project-specific analysis.
Crestmont Capital is rated the #1 business lender in the United States and specializes in complex hospitality financing. Our team has helped hotel investors across all Marriott brand tiers - from select-service to full-service luxury - secure the capital they need to acquire, build, and grow their hotel portfolios.
No obligation. No hard credit pull to start. Get real answers about your Sheraton franchise financing options in 24-48 hours.
Apply for a Hotel Franchise LoanThe initial franchise fee for a Sheraton ranges from $75,000 to $150,000. However, total investment costs for a full-service Sheraton property - including land, construction or renovation, FF&E, and pre-opening expenses - typically range from $15 million to $80 million or more depending on market, property size, and whether you are building new or converting an existing hotel.
What are the ongoing fees for a Sheraton franchise?Sheraton franchisees pay ongoing royalty fees of approximately 5.5% to 6% of gross room revenue annually, plus marketing and program fees of approximately 3% to 4% of gross room revenue. This brings the combined ongoing fee load to roughly 9% to 10% of gross room revenue per year paid to Marriott International.
What financial qualifications does Marriott require for a Sheraton franchise?Marriott typically requires Sheraton franchise applicants to have a minimum net worth of $10 million or more and liquidity (accessible cash or near-cash assets) of $2 million or more. They also expect demonstrated hotel development or management experience and evidence that financing commitments are substantially in place.
Can I use an SBA loan to finance a Sheraton franchise?Yes. SBA 504 loans are commonly used for hotel franchise acquisitions and can provide up to $5.5 million in CDC debenture financing with below-market fixed rates. SBA 7(a) loans (up to $5 million) are also available for smaller projects or mixed-use financing needs. For larger Sheraton projects above SBA size limits, conventional commercial real estate loans or CMBS financing are typically required.
How much equity do I need to finance a Sheraton hotel?Most hotel lenders require equity contributions of 25% to 35% of total project cost for full-service Sheraton-level properties. For a $40 million project, that means $10 million to $14 million of equity. This equity can come from personal funds, equity partners, EB-5 investors, or other sources, but it must be documented and verified before loan closing.
What is the debt service coverage ratio (DSCR) required for a hotel loan?Most hotel lenders require a minimum DSCR of 1.25x on projected stabilized cash flows. This means the property's net operating income after all expenses (including franchise fees) must exceed annual debt service by at least 25%. Stronger borrowers and lower-risk markets may allow for slightly lower DSCR requirements, while construction or value-add projects typically require higher projected stabilized DSCRs to account for ramp-up risk.
What is a product improvement plan (PIP) and how does it affect financing?A product improvement plan (PIP) is Marriott's requirement for upgrading an existing hotel property to meet Sheraton brand standards. PIPs can range from a few hundred thousand dollars to tens of millions depending on the current condition of the property. PIP costs must be factored into your total financing needs and are typically funded through the construction or renovation loan. Lenders will review the PIP budget as part of underwriting.
How long is a Sheraton franchise agreement?Sheraton franchise agreements typically run for 20 to 30 years from the opening date of the hotel. These are long-term commitments with significant financial obligations. The franchise agreement cannot typically be terminated early without substantial penalty fees. During the term, Marriott may require PIPs at trigger events such as sale or refinancing of the property.
Can I get a Sheraton franchise with bad credit?Marriott's franchise approval process and lender underwriting standards for full-service hotels are both rigorous. Poor personal credit makes approval significantly more difficult. However, borrowers with credit challenges may be able to improve their position with a larger equity contribution, a co-borrower with strong credit, or an experienced management company as a guarantor. Reviewing available bad credit business loan options with Crestmont Capital is a good starting point.
What is the difference between a Sheraton franchise and a Sheraton Select franchise?Sheraton Hotels and Resorts is the full-service, upscale tier of the Sheraton brand, typically featuring restaurants, bars, meeting space, fitness centers, and full amenity packages. Sheraton Select (sometimes called Sheraton Select Service or Four Points by Sheraton) refers to select-service or focused-service variants that have lower investment costs and a more streamlined amenity offering. Financing requirements and investment scales differ significantly between the two tiers.
What is the Marriott Bonvoy loyalty program and why does it matter for my Sheraton franchise?Marriott Bonvoy is Marriott International's global loyalty program with over 200 million members. As a Sheraton franchisee, your property participates in Bonvoy automatically - giving you access to a massive base of loyal, repeat travelers who actively seek out Marriott-affiliated properties. Bonvoy members book directly, reducing your dependence on third-party OTAs (online travel agencies) and their associated commission costs, which directly improves your profitability.
How does Crestmont Capital help with Sheraton franchise loans?Crestmont Capital specializes in hotel franchise financing across all major brands, including Marriott-affiliated properties like Sheraton. We help investors structure their capital stack, connect with hotel-specialized lenders, navigate SBA loan programs, and secure equipment financing for FF&E. Our team understands hospitality lending metrics and can position your application for the best possible outcome. Contact us to start exploring your options.
What type of hotel market feasibility study do I need for a Sheraton loan?Most lenders and Marriott require a formal hotel market feasibility study prepared by a qualified hospitality consulting firm. This study analyzes the local hotel market, identifies the competitive set, projects occupancy, ADR, and RevPAR for the proposed Sheraton, and validates the financial projections in your business plan. STR (Smith Travel Research) data is commonly referenced in these studies. The cost of a professional feasibility study typically ranges from $15,000 to $50,000 depending on scope and market complexity.
Can I use mezzanine financing for a Sheraton hotel project?Yes. Mezzanine financing is commonly used in hotel capital stacks - particularly for larger full-service projects like Sheraton where the gap between senior debt capacity and required equity is significant. Mezzanine lenders typically charge 10% to 15%+ interest and take a position subordinate to senior debt. Mezzanine loans are typically interest-only during the development period and are repaid upon stabilization or sale. They can significantly reduce the equity requirement for large hotel projects.
How long does it take to get a hotel franchise loan approved?Hotel franchise loan timelines vary significantly by loan type and lender. SBA 7(a) loans can take 60 to 90 days from application to closing. SBA 504 loans may take 90 to 120 days due to the additional CDC involvement. Conventional commercial real estate loans typically take 60 to 90 days. Construction loans can take longer due to additional due diligence. Working with an experienced broker like Crestmont Capital can reduce timelines by ensuring your application is complete and properly positioned from day one.
Disclaimer: The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Funding terms, qualifications, and product availability may vary and are subject to change without notice. Crestmont Capital does not guarantee approval, rates, or specific outcomes. For personalized information about your business funding options, contact our team directly.