InterContinental Hotels Group PLC (IHG) announces that it has today placed the next tranche of hotels on the market with a net book value of approximately …
InterContinental Hotels Group PLC (“IHG”) announces that it has today placed the next tranche of hotels on the market with a net book value of approximately £500m . This is in line with the statement in IHG`s first quarter results announcement on 27 May 2004 that as part of the continuation of its strategy of continuing to grow its management and franchise businesses and reducing asset ownership, it intended to dispose of approximately a further £500m of hotel assets.
The hotels earmarked for disposal are predominantly in North America and include the InterContinental hotels in Miami and Chicago as well as other InterContinentals and hotels under the Crowne Plaza and Holiday Inn brands.
These hotels are expected to generate approximately £15m of EBIT and £39m of EBITDA in 2004 and the intention is to retain management contracts. Hotels will only be sold providing satisfactory prices are achieved.
In addition to the hotels placed on the market today, IHG continues actively to progress the sale of the £129m of hotels highlighted in the May 27 announcement. Of these, the Group has completed the sale of two hotels with proceeds of more than £17m – the Holiday Inn, Gatwick, UK and the Holiday Inn, Adelaide, Australia.
Therefore, since demerger in April 2003 IHG has now sold a total of 28 hotels generating proceeds of more than £320m, with aggregate proceeds above net book value. Today`s announcement takes the total net book value of hotels sold or being actively marketed to almost £1bn.
An update on progress, potential further disposals and return of capital to shareholders will be provided at IHG`s interim results presentation on September 9 2004. To date IHG has purchased £138m of shares as part of the current £250m buyback programme. This equates to approximately 27 million shares at an average price of around 512p.
Commenting on the announcement Richard North, Chief Executive, IHG, said:
“Today`s announcement is a further step in the execution of our strategy of reducing the capital intensity of the business and enhancing return on capital. We will continue to grow our already large managed and franchise businesses by capitalising on the strength of our brands and proven franchise and hotel management skills.”
Summary detail of disposals and properties for sale to date (since demerger)
Sold to date: 28 hotels (4146 rooms), sale proceeds of £323m
IC Mayfair, UK 289 rooms
IC Central Park South, USA 208 rooms
CP Midland Manchester, UK 303 rooms
CP Vanuatu, Vanuatu 140 rooms
HI South Bend, USA 229 rooms
HI Sheffield West, UK 138 rooms
HI Middlesborough/Teeside, UK 134 rooms
HI Gatwick Crawley, UK 217 rooms
HI Newcastle, Aus 72 rooms
HI Adelaide, Aus 193 rooms
HI Darwin, Aus 183 rooms
Posthouse Epping, UK 79 rooms
16 Staybridge Suites, USA 1961 rooms
Currently on market: 13 hotels, net book value of £110m
Comprising: IC Edinburgh, CP United Nations, New York , 11 others
New to market today: 20 hotels, net book value £512m
Comprising: IC Miami, IC Chicago, 18 other hotels
Total number of hotels disposed and for sale: 61 hotels, £945m net book value
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
