Does Crowne Plaza allocate expenses incurred by affiliated companies in its consolidated financial statements, and if so, where is this allocation described?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
sidiaries, Holiday Hospitality Franchising, LLC. The avid hotels, Atwell Suites, voco, Vignette and Garner brands are owned by Six Continents Limited, which licenses the brands to the Company. The Company in turn sub-licenses these brands to its subsidiary, Holiday Hospitality Franchising, LLC.
Basis of Presentation
The Company is a wholly owned subsidiary of the Parent. Accordingly, the Parent's investment in the Company (Parent's Investment on the consolidated balance sheets) is presented in lieu of stockholders' equity. The financial statements are not necessarily indicative of the financial position, results of operations, and cash flows that might have occurred had the Company been a stand-alone entity not integrated into the Parent's other operations.
Notes to Consolidated Financial Statements (continued)
1. Description of the Business and Summary of Significant Accounting Policies (continued)
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S."). All assets, liabilities, revenues and expenses in the accompanying consolidated financial statements have been derived from the separate records maintained by the Company except for the allocation of certain expenses incurred by affiliated companies (see Note 13). In certain cases, allocations do not represent the costs that would be or would have been incurred if the Company were a stand-alone operation.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the company does allocate certain expenses incurred by affiliated companies in its consolidated financial statements. This allocation is referenced in Note 1 and further detailed in Note 13 of the Notes to Consolidated Financial Statements.
Note 1 states that all assets, liabilities, revenues, and expenses in the consolidated financial statements are derived from the company's separate records, except for the allocation of certain expenses incurred by affiliated companies. It also clarifies that these allocations may not represent the costs that would be incurred if the company operated independently.
Note 13 provides specific figures regarding these allocations. Crowne Plaza made net allocations of overhead expenses to affiliated companies of $155.4 million in 2024, $168.7 million in 2023, and $134.6 million in 2022. Additionally, the company paid insurance expenses to SCH Insurance Company Inc., a wholly-owned subsidiary of the Parent, amounting to $32.4 million in 2024, $28.8 million in 2023, and $19.3 million in 2022. These insurance expenses primarily cover premium charges and estimated losses for U.S. medical healthcare stop loss and workers' compensation insurance.
Furthermore, Crowne Plaza recognized revenue from affiliated companies for service fees, with amounts of $61.7 million in 2024, $54.0 million in 2023, and $46.5 million in 2022. These related-party transactions are important for prospective franchisees to understand, as they can impact the financial performance and reported results of the company. Understanding these allocations helps franchisees gain a clearer picture of the true costs and revenues associated with the Crowne Plaza business.