Hotel Development in Detail
Most of our hotels operate under a franchise agreement or are managed by IHG on behalf of owners. All hotels are supported by our revenue delivery systems and marketing programmes, which drive business to our hotels.
With more than 50 years of franchising, IHG® has mastered the model. We work with owners closely to help them uphold the highest standards of quality and service. As a franchisee, you'll be in business for yourself, but not by yourself.
Ownership of a franchise can bring considerable benefits: for instance, you can brand your hotel with a well-known, popular IHG hotel name, and enjoy a franchise contract that provides a powerful set of tools to drive new business.
A franchise contract is generally a standard one, with a typical royalty fee of 5% of room revenue.
When IHG manages your hotel, we handle all operational issues while you continue to own the physical building.Management contract terms are negotiated and the contract consists of two fees:
- A base fee
- An incentive fee
The base fee is a percentage of the total revenue paid to cover management costs, while the incentive fee is a share of profits - typically gross operating profit or another agreed measure of profit. This serves to align the interests of IHG with the owner of the property, and rewards IHG for maximising hotel profitability.
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