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InterContinental Hotels & Resorts Franchise Cost & Fees

Date of Incorporation: 1946
Franchising Since: 1956
U.S. Headquarters: Atlanta, Georgia
Country of Origin: England

Business Description: The franchisor is Holiday Hospitality Franchising, LLC (HHFL). InterContinental Hotels are typically located in major markets, important secondary cities and resort destinations. InterContinental Resorts are located in resort destinations. InterContinental Hotels and InterContinental Resorts are full service facilities targeted to discriminating business, conference and leisure travelers. HHFL also offers franchises for the Staybridge Suites, Holiday Inn, Holiday Inn Express and Crowne Plaza hotel brand groups in the United States and Canada.

Franchise Offer: The Hotel franchisees operate will be part of the InterContinental Hotels & Resorts system. The System is designed to provide distinctive, high quality hotel service to the public, and includes, among other things, those service marks and copyrights, trademarks and similar intellectual property rights that HHFL designates.

Financial Assistance: HHFL does not offer any formal program for direct or indirect financing. HHFL, SCH or its affiliate, General Innkeeping Acceptance Corporation, 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.

Training and Assistance: HHFL does not assist in the hiring of employees, but it will train certain Hotel employees either at the franchisee’s Hotel, at HHFL’s 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 HHFL may charge you a fee to attend training workshops. Every General Manager must satisfactorily complete the GM initial certification training program within 180 days of assuming the position, and must be acceptable to HHFL. Guest Service Managers, Sales Directors/Managers, Executive Housekeepers, Director of Engineering, Designated Trainers and Food and Beverage Directors must also satisfactorily complete the appropriate training at HHFL’s corporate office or another location that HHFL designates, within 90 days of assuming their respective positions. HHFL’s employees will provide on-site consulting and/or training visit(s) to the Hotel each year. During the term of the agreement, HHFL will provide required and optional training programs at various locations, including HHFL's headquarters.

Territory: HHFL does not 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 franchisees, from hotels that HHFL or its affiliates own, or from other channels of distribution or competitive brands that HHFL or its affiliates control.

Term of Agreement and Renewal: The length of the initial franchise term is 20 years. The License does not provide for renewal or term extensions. If HHFL agrees to Re-license, the franchisee may be asked to sign a contract with materially different terms and conditions than the original contract.

Obligations and Restrictions: Whether the franchisee is an individual, corporation, partnership or other entity, HHFL requires you to retain and exercise direct management control over the Hotel's business at all times unless otherwise approved by HHFL. However, HHFL does not require that franchisees participate personally in the direct operation of the Hotel. HHFL may include conditions in your License requiring franchisees to hire a duly qualified and experienced management company, General Manager, or Director of Sales acceptable to HHFL. 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.

Estimated Number of Units: 5,000 (across all brands)

Investment Tables:
Initial Investment for a 300 room InterContinental Hotel or Resort
Name of Fee Low High
Application Fee Fee $150,000 $150,000
Property Improvement Plan (PIP) Fee $5,000 $5,000
Land Varies
Building Construction $54,139,050 $73,246,950
Furniture, Fixtures & Equipment $9,553,950 $15,923,250
Opening Inventory $1,050,000 $2,100,000
Primary Identification Sign (including installation, freight, foundation and wiring) $210,000 $420,000
PMS Equipment; Software; Installation & Training; HOLIDEX Plus Equipment & Training. $124,000 $187,000
Market Feasibility Study $15,000 $50,000
Hotel Openings Services & Transitions (HOST) training (materials & shipping, plus trainer’s travel and lodging) $8,000 plus trainer expenses
New Hotel Opening Training Materials $0 $5,000
Initial Certification Training Program (plus trainer expenses) $2,190 $15,000
Pre-Opening Training $2,500 $5,000
Pre-Opening Re-visit (plus trainer expenses) $0 $2,500
Licenses and Permits Varies
Professional Fees $750,000 $3,000,000
Security Deposits $10,000 $50,000
Insurance $200,000 $625,000
Financing and Closing Varies
Additional Funds and Prepaid Expenses during the initial Phase (first 3 months after opening) $1,000,000 $2,625,000
Hotel Photography $5,300 $6,200
IHG Frontline $2,200 $2,200
ESTIMATED TOTAL (These estimates do not include real estate related costs or other items that HHFL cannot estimate.) $67,250,240 $98,487,600
Other Fees
Type of Fee Amount
Royalty 5% of Gross Rooms Revenue.
Capital Revenue Up to 5% of Gross Revenue.
Standard Fee for Room Additions $500 for each new approved guest room or suite.
Fees for Extensions of Commencement Deadlines:

a. New Development (6 month extensions)
b. New Development (extensions of less than 6 months)
c. Room Additions (6 month extension)

a.1/2 of then-current standard minimum Application Fee.
b. Then current Application Fee prorated according to time period requested.

c. 1/2 of original room addition Application Fee.
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 Systemwide basis).
Re-Licensing Fee $500 per guest room but not less than $75,000
Changes of Ownership Fee $500 per guest room but not less than $75,000
Realignment/Name Change; Brand Conversion Processing Fee $5,000 for franchisee name change, ownership realignment or brand conversion.
PIP Inspection/Preparation Fee Up to $5,000 for a standard PIP and up to $5,000 for a courtesy PIP prepared at your request or for a re-inspection.
Plan and/or FF&E Default Up to $2,500 to cover costs of SCH travel and expenses related to plan and/or FF&E defaults.
PIP Default Travel Up to $2,500 to cover costs of SCH travel and expenses related to PIP defaults.
Quality Visits for Guest Satisfaction or Quality Evaluation Failure, Default or Termination Status/ Failed PIP Inspection Up to $7,500
Monthly Quality Self-Assessment (MQSA), Management Action Plan (MAP), or Hotels that fall below the At Risk guest satisfaction threshold $2,500 to $7,500 for failure to complete the mandatory MQSA or MAP as required. Hotels that fall into the guest satisfaction category below the At Risk brand threshold must pay up to $7,500 for each required visit and assigned training classes.
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.
Liquidated Damages Payment on premature termination before HHFL authorizes you 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 paragraphs 3.B(1), (3) and (4) of the License assuming the Hotel had collected Gross Rooms Revenue based on the average daily revenue per available room for all hotels in the System for the previous 12 months, as determined by HHFL, 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 you 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 under License paragraphs 3.B(1), (3) and (4) 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 Frequency Program $10.00 per approved guest room.
Special Marketing Contribution for Frequency Program $4.75 per enrolling stay with a flat 1000 points issued. 4.75% of Qualifying Full Folio revenue from Frequency Program members. 1.425% of Qualifying Room and Meeting Revenue from Frequency Program members.
IHG Commission Services (“ICS”) (Travel Agent Commissions)] 10% (minimum) commission on total room rate.
Third Party Distribution Connection Fees Varies.
IHG Voice Reservation Service $7.50 per net booking, which may be changed once annually. Non-participating Hotels may be charged a commission of 10% for Cross Sells generated from this Service. This commission may also be applied to non-participating hotels who transfer hotel direct calls to public InterContinental Hotels Group CRO toll-free numbers.
Revenue Management for Hire Program $425 - $3,350 per month depending on total Hotel room count and annual occupancy. (These fees apply until December 31, 2014, after which they may change.) Plus, out of pocket travel expenses for SCH personnel. (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) $1,195-$1,500
Performance Marketing Fees 10% – 15% commission on consumed revenue booked.
GDS Biasing Programs 5% of incremental revenues through the programs.
BTA Revenue Program 2.25% - 5.00% override fee (in addition to standard travel agency commission) per consumed room nights, to a maximum $20,000
Mid-Market Account Program Booking Fees 7% of consumed transient revenue booked through the Mid-Market Account Program. 5.5% of consumed group revenue booked through Mid-Market Account Program.
Activation Training for PERFORM Prior to activating PERFORM, Hotel must attend PERFORM The Fundamentals Training. Cost for Training ranges from $350 to $395
Activation Training for PERFORM with Price Optimization Prior to activating PERFORM with Price Optimization, Hotel must attend either a virtual or classroom training session. Cost for training ranges from $350 to $395.
Additionally, for Hotels that do not participate in Revenue Management for Hire, additional costs of between $30 and $60 may apply.
IHG Rewards Club Measured Standards $500 per standard failed. Fee escalates by an incremental $500 each consecutive quarter Hotel in “Failure” status.
PMS Software Maintenance Costs will vary according to your technology needs. The following are estimates for the premise-based option and do not include all items, which may be reflected in the franchisee Hotel’s contract with Oracle America, Inc. Maintenance and/or hosting fees may be increased up to 5% per year. Costs will vary according to the franchisee’s technology needs.
Opera– Premise Based $21.50 per room, per year for PMS. $3.09 per room, per year, for Oracle (the database management system for the PMS). $440.00 per interface, per year, above bundle (excludes Micros POS & Credit Cards). The Credit Card Interface Maintenance Fee for the PMS Software Maintenance is $528.00 per year.
Opera Xpress – Hosted $6.10 per room, per year for PMS. $0.37 per interface, per month, above bundle (excludes Micros POS & Credit Cards). The Credit Card Hosted Interface Fee for is $150.45 per year.
FastConnect Plus And Access Control Manager $167.32
Secure Payment Solution Maintenance Support $156.25
Guest Internet Access – Bandwidth Service Subscription $1,000 to $2,800. Pricing is estimated and varies based on regional service providers.
PMS Hardware Maintenance (Costs vary according to technology needs. These are estimates) $150.00 (1-150 rooms)
$175.00 (151-250 rooms)
$200.00 (251 + rooms)
Costs are noted above on a per month basis.
Gift Card Equipment Estimated terminal cost of $295-$400 (one time charge) if a terminal is required.
Technology Fee $13.53 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, 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.
Pre-Opening Training and Consultation:

(a) New Investor Orientation and Certification Program

(b) General Manager (GM) Program

(c) Pre-Opening Training Plan-Executive Briefing (Consulting & Support)

(d) On-Site Pre-Opening Training-Manager Orientation and Department Training Planning

(e) On-Site Pre-Opening Training Part II- Hotel Orientation On-Site Center of Excellence Opening Support Team

(f) On-Site Pre-Opening Training-Bring It To Life Service Culture

(a) $7,500 plus expenses and covers two attendees for the HOST and ramp-up program. Up to $250 for additional attendees plus $250 for the Ramp-up program.

(b) $295-$5,000.

(c) $500 per day.

(d) $1,500 a day per trainer.

(e) $640-1500 per day per trainer/task force member.

(f)Food, lodging, meeting room, and equipment expenses for HHFL’s employees.
Ongoing Management Training Fees Pricing for workshops range from $300-$5,000 per workshop depending on length, subject, content and delivery.
Owner Conference – Lifestyle Brands $1,500 - $2,500 per attendee, not inclusive of travel.
Green Engage $50 monthly.
Employee Engagement Survey $7 to $12 per employee each year.
IHG Frontline $2,200 per year per hotel.

The above information has been taken from the FDD of InterContinental Hotels & Resorts. Year of FDD: 2016

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