IHG’s Race to Avoid Defaulting on More Than 100 Hotels: What’s the Fallout?
Photo Credit: IHG is in default and risks a franchise agreement termination at 103 hotels, including the InterContinental San Juan (pictured). Flickr / Prayitno
Skift Take
IHG could become the first major victim of a coronavirus-related financial drag on hotels in North America, but its default may be a strategic play on a financial structure unusual for such a global brand.
An IHG default on hotel payments in July could lead to the first large opportunity in North America for another brand to take over those properties, all directly a result from the coronavirus pandemic.
IHG defaulted on $8.4 million in guaranteed property returns this month across 103 hotels owned by suburban Boston-based Service Properties Trust, the real estate firm claims. The portfolio — three InterContinental properties, five Kimptons, 11 Crowne Plazas, three Holiday Inns, 20 Staybridge Suites, and 61 Candlewood Suites — is spread out across the U.S., Canada, and Puerto Rico.
But if Service Properties Trust terminates its franchise agreement with IHG, the smaller Sonesta International Hotels Corp. stands to benefit.
“If IHG is not prepared to continue paying us our returns on these important assets, we believe that the rebranding of these hotels with Sonesta will benefit SVC [Service Properties Trust] as an owner of Sonesta, create greater flexibility in managing the
