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ranged from 1 to 3 percent, and reservations fees ranged from 1
to 2 percent. Finding no completely comparable transaction, BVS
used the royalty of 1 percent of gross hotel revenue that HESA
paid HHK. BVS then calculated that 15 percent of HIC’s net
adjusted revenues (after all other allocations) approximated the
1 percent of gross hotel income HESA paid as a royalty. That
amount and most of respondent’s notice determinations included
within the royalty the use of the trademarks/trade names and
other intangibles.
The original HESA agreement provided for royalties of 2
percent of hotel gross income within the context of a consulting
fee in the amount of 75 percent of HESA’s management fee revenue.
As more hotels were added to the venture, royalties were reduced
to 1 percent. Although petitioners have put their spin on the
reasons for the rate reduction, it is not entirely clear why BVS
chose the 1-percent, rather than the 2-percent, rate. The HESA
royalty included use of the trade names and marks and all Hyatt
chain services. We note that Hyatt Domestic licensed the use of
its names and marks but provided only a portion of the Hyatt
International group’s chain services, and the latter was, to some
extent, balanced by the Hyatt International group’s reciprocation
of similar services.
Importantly, the HESA agreements reflect a relationship that
is quite different from the relationship between Hyatt Domestic
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