Does the estimated initial investment for a Crowne Plaza hotel include the cost of land?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
d in this Item. Holiday will only consider proposed changes under special circumstances and any changes must comply with applicable laws.
ITEM 7
ESTIMATED INITIAL INVESTMENT
The following tables provide an estimate of the initial investment for each of the Crowne Plaza brand group hotels listed below based on a 250-room Crowne Plaza or Crowne Plaza Suites hotel.
These estimates do not include the cost of land and contingency funds or other items that Holiday cannot estimate.
YOUR ESTIMATED INITIAL INVESTMENT
| Type of Expenditure | Amount | Method of Payment and When Due | To Whom Payment Is to be Made |
|---|---|---|---|
| Application Fee | $125,000 | Lump sum with | H oliday |
| (Note 1) | application | ||
| Property Improvement Plan | $ 0 to $10,000 | Before you | H oliday |
| (“PIP”) fee | submit your | ||
| (Note 1) | application | ||
| Land (3 1/2 to 5 acre |
Source: Item 7 — Estimated Initial Investment (FDD pages 51–59)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, the estimated initial investment for a Crowne Plaza hotel does not include the cost of land. The FDD explicitly states that the estimates provided do not include the cost of land, contingency funds, or other items that the franchisor, Holiday, cannot estimate. This exclusion is highlighted in Item 7 of the FDD. Therefore, prospective franchisees must consider land costs separately when evaluating the total investment required. Note 2 further clarifies that since land values vary dramatically, it is not possible for Holiday to estimate the amount required to purchase or lease the land necessary to operate the Hotel. The franchisee is advised to develop their own estimate by applying the acreage requirements to the local land sale or lease costs in the geographic area in which the Hotel will be situated.
This exclusion of land costs is a critical consideration for potential Crowne Plaza franchisees. Land acquisition can represent a significant portion of the total investment, and its cost varies widely depending on location. The FDD advises franchisees to conduct their own due diligence to determine realistic land costs in their target market. This involves researching local real estate prices, considering factors such as property size, zoning regulations, and accessibility. Additionally, franchisees should factor in potential financing costs associated with land acquisition, as these can also impact the overall investment.
Furthermore, the FDD provides a table outlining various expenditures associated with opening a Crowne Plaza hotel, including items such as application fees, property improvement plan fees, building construction, furniture, fixtures, and equipment. While the table includes a line item for "Land (3 1/2 to 5 acres)," no specific dollar amount is provided, reinforcing the fact that land costs are highly variable and must be estimated independently by the franchisee. The table indicates that payment for land is "As required" and is made to "3rd parties."
In summary, while the Crowne Plaza FDD provides a detailed breakdown of many initial investment costs, it explicitly excludes land costs due to their variability. Prospective franchisees must conduct thorough market research to estimate land costs accurately and factor them into their overall financial projections. This independent assessment is crucial for making informed investment decisions and ensuring the financial viability of a Crowne Plaza franchise.