What interest rate is accrued on the line of credit for Crowne Plaza, and how is it compounded?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
ts are not reflected in franchise royalty fees (see Note 3). All amounts due to or from affiliates, other than a line of credit from an affiliate (see Note 5), are non-interest-bearing and have no stated maturity date.
Net payables to affiliates included in the balance sheets are $202.6 million and $148.7 million at December 31, 2024 and 2023, respectively. These current amounts are of a working capital nature. Receivables from affiliates are considered to be fully recoverable on the basis of the Group's creditworthiness (see Note 5).
An affiliated company has made commitments to pay key money on behalf of the Company. During the years ended December 31, 2024, 2023 and 2022, contract assets, net of disposals, totaling $40.3 million, $24.9 million and $33.0
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the line of credit facility available to its affiliate accrues interest at the IRS applicable federal interest rate, compounded monthly. As of December 31, 2024, $770.6 million remained receivable, and as of December 31, 2023, $702.1 million remained receivable from Six Continents Hotels, Inc., which includes interest receivable. The line of credit facility is currently $1.0 billion with a maturity date of March 31, 2027.
During the years ended December 31, 2024, 2023, and 2022, interest income recognized on the line of credit amounted to $29.6 million, $27.8 million, and $13.3 million, respectively. There were no related fees and costs incurred on the line of credit in any of these years. On the maturity date, the entire outstanding principal balance, along with all accrued and unpaid interest, is due and payable in full.
This information is relevant to prospective Crowne Plaza franchisees as it provides insight into the financial arrangements between the franchisor and its affiliates. While the franchisee does not directly benefit from this line of credit, it reflects the financial management and resources available within the InterContinental Hotels Group PLC, which can indirectly impact the stability and support provided to the Crowne Plaza franchise system. Understanding these financial relationships can help franchisees assess the overall financial health and risk profile of the franchisor.