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to Hyatt International hotels’ status as luxury or resort hotels.
Mr. Burt located the $62,000 figure in the same Eyster study used
by Dr. Mooney. The Eyster study provided information that
independent operators required $24,000 to $62,000 in annual
earnings based on a survey of 29 independent hotel operating
companies. If fees exceeded $62,000, Mr. Burt advised that the
excess be allocated to HIC. Mr. Burt also repeated his earlier
opinion that 1.5 percent of hotel gross revenue is an arm’s-
length royalty and would have been paid to Hyatt Domestic out of
this excess.
For purposes of trial, however, respondent relied on the BVS
report/opinion. That opinion was formulated by means of a four-
step process. First, and prior to determining allocations for
royalties or management services income, BVS reassigned the
management fee income of certain hotels from one subsidiary to
another or to HIC based on BVS’ perceptions of the roles played
in developing the contract or in managing the hotel. Second, BVS
employed a royalty equal to 15 percent of HIC’s revenues
(calculated after adjustments for all of the other types of
allocations) due from HIC to Hyatt Domestic. The resulting
figure was thought to represent a profit split between HIC and
Hyatt Domestic. The split was intended to account for Hyatt
Domestic’s contribution of its investment in chain services and
its position as the originator of the Hyatt trade name and marks
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