
Are you passionate about the hospitality industry and dream of owning your own hotel franchise? Look no further than InterContinental Hotels Group (IHG), a global leader in hospitality renowned for its diverse portfolio of iconic brands. At Star Brands Consulting Ltd., we specialize in guiding aspiring entrepreneurs towards lucrative franchise opportunities, and IHG stands out as a beacon of success in the hospitality sector.
Year Business Began: 1946
Franchising Since: 1956
U.S. Headquarters: Atlanta, Georgia
Country of Origin: England
Estimated Number of Units: 210 (6,165 est. across all InterContinental Hotels Group brands)
Franchise Description: The franchisor is Holiday Hospitality Franchising, LLC (HHFL). HHFL’s ultimate corporate parent is InterContinental Hotels Group PLC. The franchisor offers and grants franchises under the terms of a License Agreement. The license provides for the establishment and operation of an InterContinental Hotel or an InterContinental Resort. InterContinental Hotels are typically located in major markets, important secondary cities and resort destinations. InterContinental Hotels and InterContinental Resorts are full service facilities targeted to luxury business, conference and leisure travelers. Other brands under the InterContinental umbrella include: Atwell Suites, Avid Hotels, Candlewood Suites, Crowne Plaza Hotels and Resorts, Even Hotels, Holiday Inn Hotels and Resorts, Holiday Inn Express, Holiday Inn Club Vacations, Hotel Indigo, HuaLuxe Hotels and Resorts, Klimpton Hotels, Regent Hotels & Resorts, Six Senses, Staybridge Suites, and Voco Hotels.

Training Overview: The franchisor does not assist in the hiring of employees, but it will train certain hotel employees either at the franchisee’s hotel, at its headquarters in Atlanta, Georgia, or at various other major metropolitan locations which it may designate. Franchisees must pay any travel and living expenses of their trainees, and the franchisor may charge franchisees a fee to attend training workshops. Every general manager must satisfactorily complete the IHG® General Manager Program Onboarding Level within the dates required per the franchisor’s standards. HHFL also recommends that the General Manager obtains the Certified Hotel Administrator (CHA) designation from the American Hotel & Lodging Educational Institute (AHLEI). The persons holding certain positions in the hotel including, directors of sales, sales managers, front office managers, executive housekeepers, directors of engineering, and food and beverage directors or managers must also satisfactorily complete the appropriate training and/or certification at HHFL’s corporate office or another location that HHFL designates, within the date limits specified in the franchisor’s standards of assuming their respective positions. The franchisor’s employees will provide on-site consulting and/or training visit(s) to the hotel each year.
Territory Granted: The franchisor does not typically grant franchises for exclusive areas or territories. The license will be for a specific site only and for the licensing of one hotel. The license applies to the location specified in the license and to no other location. Franchisees will not receive an exclusive territory. Franchisees may face competition from other licensees, from hotels that the franchisor or its affiliates own, or from other channels of distribution or competitive brands that the franchisor or its affiliates control. In special circumstances, when in the franchisor’s sole judgment, special considerations warrant, HHFL may grant exclusive or protected areas in which another InterContinental Hotel will not be licensed; however, in such cases the license would still be for a specific site only and for the licensing of one hotel only.
Obligations and Restrictions: Whether franchisees are an individual, corporation, partnership or other entity, the franchisor requires them to retain and exercise direct management control over the hotel’s business at all times unless otherwise approved by the franchisor. However, the franchisor does not require that franchisees participate personally in the direct operation of the hotel. The franchisor may include conditions in the license requiring franchisees to hire a duly qualified and experienced (i) management company acceptable to HHFL or (ii) general manager, director of food & beverage or director of sales with at least two years prior experience in such position at a hotel operated under any of HHFL’s brands or at a hotel in a similar brand segment as the hotel, as defined by Smith Travel Research, Inc. The franchisor requires franchisees with management experience who will supervise the hotel on the premises or hire a management company it approves. A general manager who has successfully completed the franchisor’s training program must directly supervise the business on the premises. Franchisees must provide the hotel services described in the license and must ensure that no part of the hotel or the system is used to facilitate or promote a competing business. There are no restrictions as to the customers to whom franchisees may sell guest rooms or other goods or services that are related to the hotel business.
Term of Agreement and Renewal: The length of the initial franchise term is 20 years from the date the hotel opens in the system for a new development; 10 years from the date the hotel opens in the system for a conversion; and 10 years from the term commencement date for a change of ownership or re-licensing. The license does not provide for renewal or term extensions. If the franchisor agrees to re-license, franchisees may be asked to sign a contract with materially different terms and conditions than the original contract.
Financial Assistance: The franchisor does not offer any formal program for direct or indirect financing. HHFL, SCH or its affiliate, General Innkeeping Acceptance Corporation (GIAC), may furnish loans or guaranties. HHFL, SCH and GIAC consider making loans or guaranties under terms and conditions that would be negotiated on a case by case basis with the prospective franchisee and any decision to make a loan or provide a guaranty would be made in the judgment of HHFL, SCH or GIAC alone, and conditioned upon approval of the Executive Committee and Board of Directors. It is the franchisee’s responsibility alone to obtain adequate financing for all expenses related to the development, opening and operation of the hotel.
Investment Tables:
Name of Fee | Low | High |
---|---|---|
Application Fee | $150,000 | $150,000 |
Property Improvement Plan (PIP) Fee | $0 | $12,000 |
Land | Varies | |
Building Construction | $75,923,700 | $102,720,200 |
Furniture, Fixtures & Equipment | $12,520,100 | $20,688,100 |
Financing and Closing | Varies | |
Operating Supplies & Equipment | $3,120,000 | $4,500,000 |
Primary Identification Sign (including installation, freight, foundation and wiring) | $50,000 | $175,000 |
PMS Equipment; Software; Installation & Training; IHG Concerto™ Equipment & Training; SPS Equipment; Software; Installation & Training | $124,000 | $187,000 |
Guest Internet Access – Hardware (IHG Connect) | $22,750 | $49,000 |
Guest Internet Access Connect Bandwidth Fiber Construction | Varies | |
Key Card System | $10,000 | $25,000 |
Digital/Wayfinding Signage | $20,000 | $90,000 |
In Room Entertainment (IHG Studio) | $27,000 | $29,000 |
Employee Safety Devices | $38,000 | $45,000 |
Public Access Computers (Business Center) | $6,400 | $7,500 |
Market Feasibility Study | $15,000 | $50,000 |
InterContinental R&B Concept Development | $125,000 | $400,000 |
Openings and Renovations Preopening Support Fee (to be invoiced within 60 days of license execution by HHFL) | $8,000 | $8,000 |
New Hotel Opening Training Materials | $0 | $5,000 |
IHG Learning Program (annual subscription; prorated based on opening month) | $6,000 | $6,000 |
Pre-Opening Training (plus trainer expenses) | $7,500 | $7,500 |
Back of House Program | $550 | $10,000 |
Opening Date Extension Fee (plus trainer expenses) | $0 | $5,000 |
License and Permits | Varies | |
Professional Fees | $3,450,000 | $6,500,000 |
Security Deposits | $10,000 | $50,000 |
Insurance | $200,000 | $625,000 |
Hotel Photography | $20,000 | $35,000 |
Additional Funds and Prepaid Expenses During the Initial Phase (first 3 months after opening) | $1,000,000 | $2,625,000 |
ESTIMATED TOTAL (These estimates do not include real estate related costs or other items that HHFL cannot estimate.) | $96,928,750 | $139,284,000 |
Type of Fee | Amount |
---|---|
Royalty | 6% of gross rooms revenue (GRR) plus 2% of gross food and beverage sales. |
Capital Revenue | Up to 5% of gross revenue. |
Fees for Extensions of Construction Commencement (CC) Deadlines: 1. New Development or Conversions (greater than 6 but less than or equal to 12 months from CC date included in original license) 2. New Development or Conversions (extensions resulting in a CC date that is greater than 12 months from the CC date included in original license) 3. Room Additions (6 month extension) | 1. $10,000 2. 1/2 of application fee. 3. 1/2 of original room addition application fee. |
Standard Fee for Room Additions | $500 for each new approved guest room or suite. |
Public Offering or Private Placement Processing Fee | $25,000 plus additional costs incurred by HHFL. |
Audit/Interest | Amount of discrepancy, interest and $3,000 (audit fee may be increased on system-wide basis). |
Re-licensing Fee | $500 per guest room but not less than $100,000. |
Change of Ownership Fee | $500 per guest room but not less than $100,000. |
Realignment/Name Change; Brand Conversion Processing Fee | $5,000 for franchisee name change, ownership realignment or brand conversion. |
Indemnification | All expenses, including attorneys’ fees and court costs, incurred by HHFL, its parents, subsidiaries, affiliates, and their successors and assigns to remedy any defaults of, or enforce any rights under the license; to effect termination of the license; or collect any amounts due under the license. |
PIP/Soft Goods or Case Goods Renovation Inspection/Preparation Fee | $12,000 for a PIP (and $6,000 for a re-inspection). |
Plan and/or FF&E Extensions and Defaults | Up to $5,000. |
PIP Extensions and Defaults and Extension Travel | Up to $5,000. |
Custom Design Review | Up to $25,000. |
Non-Compliance with Soft Goods and Case Goods Renovation Requirements | Up to $5,000. |
Quality Evaluation Assessments for Standards Evaluation Failures | Escalating assessment of up to $7,500. |
Guest Love Performance Compliance Program for Hotels That Fall Below the At Risk Guest Satisfaction Threshold | Escalating assessment of up to $13,500 . |
Liquidated Damages Payment on Premature Termination Before HHFL Authorizes Franchisees to use The System at the Hotel (includes termination resulting from failure to perform the construction, upgrading and renovation work described in the license) | A lump sum equal to the monthly average of all amounts that would have been payable to HHFL under the license assuming the hotel had collected GRR based on the average daily revenue per available room for all “mature hotels” in the system in the United States for the previous twelve months, multiplied by the greater of (a) 6 or (b) the number of full and partial months from the term commencement date to the termination date of the license. |
Liquidated Damages Payment on Premature Termination After HHFL Authorizes Franchisees to Use the System at the Hotel (applicable only if License terminates before expiration, in accordance with License Agreement) | An amount equal to the total amounts required during the 60 calendar months of operation preceding the termination or during the preceding number of months equal to the unexpired license term at the time of termination (if less than 60 months); or if the hotel has not been in operation in the system for 60 months, an amount equal to the greater of (i) 60 times the monthly average of these amounts for the period during which the hotel has been in operation in the system, or (ii) 60 times these amounts as are due for the one month preceding the termination. |
Royalty In Case of Casualty | 2% of GRR based on average GRR for preceding 12 months. |
Promotions; Required and Optional Advertising Materials | Expenses incurred. |
Services Contribution | 3% of GRR in aggregate. |
Initial Marketing Contribution for the Loyalty Program | $10.00 per approved guest room. |
Special Marketing Contribution for Loyalty Program | 4.75% of qualifying full folio revenue from frequency program members. 1.425% of qualifying room and meeting revenue from frequency program members. |
Local Marketing Programs | Varies depending on actual cost. |
IHG Concerto, Yield & Price Optimization | Costs of between $30 and $120 per month may apply for competitive rate insight shopping. For hotels currently subscribing to a RevenueStrategy360 or Rate360, these costs may be waived. |
IHG Commission Services (ICS) (Travel Agent Commissions) | 10% (minimum) commission on total room rate. |
IHG Ignite Digital Marketing Fees | 2.75% commission on all consumed direct digital revenue booked. |
TMC Revenue Program | Hotels pay an override fee of 2.25% on qualifying consumed room nights only, with a maximum annual payment of $20,000 USD (or equivalent local currency). For select hotels participating in the IHG Luxury & Lifestyle program, the maximum annual payment is $25,000 USD. |
IHG Business Edge Program Booking Fees | 4% of consumed transient revenue booked through the IHG Business Edge Program. |
Groups & Meetings Fee | 4% of consumed or agreed room revenue for leads sent to hotels via IHG MeetingBroker. |
Groups & Meetings TMC Fee | 2% – 4% globally for BCD M&E, CWT M&E and AMEX GBT. G&M TMC Revenue Programs are pay-for-performance marketing programs designed by SCH . |
IHG Voice Reservation Service | $7.65 per net booking, which may be changed once annually. (A commission of 10% may be applied to hotels who transfer hotel-direct calls to public IHG CRO toll-free numbers.) |
Revenue Management for Hire Program | $2,699 – $3,350 per month depending on total hotel room count and annual occupancy. (These fees are modifiable with 90 days written notice.) |
Completion of the appropriate level of IHG Revenue Management certification (if hotel is not participating in the Revenue Management for Hire Program) | $350 – $1,000 |
IHG One Rewards Measured Standards | Varies. |
PMS Software Maintenance | Varies. Maintenance and/or hosting fees may be increased up to 5% per year. Costs will vary according to the franchisee’s technology needs. |
Property Management Fees: Opera – Premise Based | Varies. |
Property Management Fees: Opera – Hosted | Varies. |
FastConnect Plus and Access Control Manager | $168 – for 6 devices and 10 users; plus $22.00 per additional device and $1.25 per additional user. |
NextGen Payments Program Fee (includes support, installation and hardware) | $251 – $801 (exact amount will be defined on hotel quote) |
Guest Internet Access – Bandwidth Service Subscription (IHG Connect) | $1,000 to $2,800. Pricing is estimated and varies based on regional service providers. |
Guest Internet Access – Hardware Maintenance & Guest Support (IHG Connect) | $1.50 per guest room; $25.00 per meeting/conference room, plus $20.00 per 2000 sq. ft. of total meeting space, maximum of $500.00 (meeting room support fees only apply if total meeting space exceeds 2000 sq. ft.) |
Guest In-Room Entertainment – Hardware, Maintenance, Guest Support, & Content (IHG Studio) | $4.75 per room, per month for software, maintenance, and guest support. $7.20 per room, per month for content. $1.25 per room, per month for HBO (where required). |
Employee Safety Devices | Initial fee of $125-$150 per room in the first year of installation plus $20.00 to $25.00 per room, per year for software and maintenance support. |
Security Software for Public Access Computers (Business Centers) | $495.00 to $525.00 per workstation, per year for software, maintenance, and guest support $315.00 to $399.00 per printer, per year for the optional mobile printing feature. |
Technology Services Fee | $16.73 per room, per month. |
Tax on Sales/Gross Receipts | HHFL’s actual cost. |
Guest Relations Fees | Quality and service contacts from hotels will be handled by Guest Relations in the ‘One Contact Resolution’ process. Hotels will be charged a case management fee of $150 per incident, plus the compensation amount of no greater than one night room and tax. Non Service and Quality cases (such as billing or reservations issues) that are not resolved within 48 hours by the hotel will be handled by Guest Relations with a case management fee of $150 per incident. |
Pre-Opening Training – Manager Orientation and Department Training Planning | $1,500 a day per trainer. |
Pre-Opening Training Part II – Hotel Orientation Center of Excellence Opening Support Team | $640 – $1,500 per day per trainer/task force member. |
IHG Learning Program: Core Subscription/ValueAdd and Specialist Training | The cost is $6,000/yr. Prorated based on the month the hotel opens. For in-person classes franchisees must pay trainees’ travel and optional/supplemental training expenses. |
Subsequent Training Materials | $0 – $5,000 per hotel for all trainees combined. |
Employee Engagement Survey | $7 to $12 per employee each year. |
Owner or GM Conference – Lifestyle Brands | Up to $2,500 per attendee, not inclusive of travel. |
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About Star Brands Consulting Ltd.
Star Brands Consulting Ltd. is a leading consulting firm specializing in franchise development and strategic business advisory services. With a team of seasoned experts, we empower entrepreneurs to navigate the complexities of franchising and achieve their business goals.
Disclaimer:
The information provided in this blog post is based on our analysis at Star Brands Consulting Ltd. Actual investment costs and franchise terms may vary.