IHG Sells More Hotels to Westmont Affiliate
LONDON, UK, March 13, 2006. Shares in InterContinental Hotels Group, the world's largest hotelier, rose as much as 4% on Monday after it sold its latest tranche of hotels to an investment fund for 240 million pounds, Reuters reported.
The UK-based group, which operates around 3,600 hotels, said it had sold 24 European Crowne Plaza, Holiday Inn and Express by Holiday Inn branded hotels to a subsidiary of Westbridge Hospitality Investment Fund LP, which is run by one of its largest franchisees, Westmont Hospitality.
InterContinental said the hotels, which are all in continental Europe, had been sold with 15-year franchise contracts. Annual franchise fees were expected to be around 4 million euros.
"This deal is another significant step in the transformation of IHG as we focus on managing and franchising hotels," said Chief Executive Andrew Cosslett.
InterContinental, which operates 540,000 hotel rooms, is in the process of selling off most of its remaining hotels in return for management contracts as it follows the example of U.S. peers. The process will leave it with just 20 owned hotels in prestige locations such as London, Paris, New York and Hong Kong.
Since its demerger from Six Continents in 2003, the group has sold or is in the process of selling more than 2.8 billion pounds of assets and has promised to return 2.75 billion pounds to shareholders, of which 2 billion pounds has already been completed. This, however, has fuelled speculation about a potential bid for the group from rival U.S. hoteliers.
Analysts have said that unless InterContinental closes the valuation gap with U.S. firms of around 20% to 25%, stateside companies such as Starwood Hotels & Resorts Worldwide, Inc or Marriott International, Inc may make an approach to take advantage of its relatively low share price.
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