If a Crowne Plaza hotel is damaged by fire, what is the Licensee's immediate obligation to IHG?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
lopment or within one year of the closing of the Hotel if the new hotel is a conversion of an existing building and the new hotel will thenceforth be deemed to be the Hotel licensed under this License. If a condemnation takes place and a new hotel is not, for whatever reason, going to become the Hotel under this License (or if it is reasonably evident to IHG that such will be the case), this License will terminate forthwith upon notice thereof by IHG to Licensee and Licensee shall have no liability for the liquidated damages set forth in paragraph 11.E. of this License.
B. Casualty.
If the Hotel is damaged by fire or other casualty, Licensee will immediately notify IHG and expeditiously repair the damage; provided, however, if all or virtually all of the Hotel is destroyed by such fire or other casualty, either IHG or (unless caused by the intentional act of Licensee or its agent) Licensee may terminate this License by fifteen days prior notice to the other delivered within sixty days of the date of the fire or other casualty. If Licensee terminates this License in accordance with this provision, Licensee shall have no liability for the liquidated damages set forth in paragraph 11.E. of this License so long as neither Licensee nor any of its Affiliates, either directly or through another person or entity, develops, leases or operates the site as a hotel or other lodging or residential facility of any kind or sort for at least five years following the date of termination (or the originally scheduled termination date of this License, if earlier) other than pursuant to another license with IHG.
Unless this License is terminated properly pursuant to the foregoing provision, Licensee will close the Hotel if required by the extent of the damage or if otherwise required by IHG; will repair or rebuild the Hotel in accordance with IHG's Standards; will commence reconstruction within six months after the fire or other casualty; will expeditiously continue on an uninterrupted basis with such reconstruction; and will, if the Hotel was closed, reopen the Hotel for continuous business operations as soon as practicable (but in any event within twenty-four months after the fire or other casualty), giving IHG at least forty-five days advance notice of the date of reopening if the Hotel was closed. If the Hotel was closed, Licensee may not reopen the Hotel or promote or otherwise hold the Hotel out as a hotel in the Brand System unless and until IHG determines that the reconstruction is completed in accordance with IHG's then current Standards. If the Hotel is not required to be closed, all work to repair damage shall be conducted so as to minimize interference with the Hotel's operation and guests. If the damage is not repaired in accordance with this paragraph, this License will forthwith terminate upon notice thereof by IHG to Licensee and Licensee shall be responsible for full liquidated damages under paragraph 11.E. of this License.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza Franchise Disclosure Document, if a Crowne Plaza hotel is damaged by fire or other casualty, the licensee must immediately notify IHG. This initial notification is a critical first step, allowing IHG to assess the situation and determine the appropriate course of action.
Following the immediate notification, the licensee is obligated to expeditiously repair the damage. However, if all or virtually all of the hotel is destroyed, either IHG or the licensee (unless the damage was intentionally caused by the licensee or its agent) has the option to terminate the license. This termination must be communicated via a 15-day prior notice to the other party within 60 days of the incident. If the licensee chooses to terminate the license under these conditions, they will not be liable for liquidated damages as outlined in paragraph 11.E of the license agreement, provided they do not develop, lease, or operate the site as a hotel or other lodging facility for at least five years, except under another license with IHG.
If the license is not terminated, the licensee is required to close the hotel if the extent of the damage necessitates it or if IHG requires closure. The licensee must then repair or rebuild the hotel according to IHG's standards, commencing reconstruction within six months of the incident and continuing without interruption. The hotel must be reopened for continuous business operations as soon as practicable, but no later than 24 months after the fire or other casualty. The licensee must also provide IHG with at least 45 days' advance notice of the reopening date if the hotel was closed. During the period the hotel is closed, the licensee is obligated to pay IHG a monthly royalty of 2% of Gross Rooms Revenue, based on the average monthly Gross Rooms Revenue for the 12 months prior to the incident, or if the hotel has not been in the Brand System for twelve months, based on the average monthly Gross Rooms Revenue for the period during which the Hotel has been in operation in the Brand System. This payment is in lieu of all other Brand System fees under paragraph 3.B. of the license agreement.