Hotels giant lines up £1bn for investors

SHAREHOLDERS in InterContinental Hotels could receive a further £1 billion pound windfall after more sales from its huge portfolio of hotels.

Since its split from pubs operator Mitchells & Butlers in April 2003, InterContinental has returned £1 billion to investors via a special dividend of £500 million and two share buybacks of £250 million.

But with assets of £2.2 billion either having been sold or put up for sale, InterContinental is understood to be planning to return up to a further £1 billion to shareholders.

The exact sum has yet to be decided, as the company might return slightly less than the total raised to cancel some debt or to keep for capital expenditure.

However, the bulk of the money - at least £600 million - is expected to be earmarked for return to shareholders via another special dividend, share buy-back or issuing a separate class of shares.

Like other hotel companies, such as Marriott, it is moving away from owning hundreds of properties to hotel management and franchising the bulk of its estate instead. Its brands includes InterContinental, Crowne Plaza and Holiday Inn.

It is now evaluating third-round bids for its portfolio of 76 Holiday Inns in the UK and Ireland, which it put up for sale in September. It is also expected to raise £200 million to £300 million for its InterContinental Paris hotel, which is the subject of a fierce bidding battle, with up to eight interested buyers.

The company recently ousted its chief executive, Richard North, who had presided over a rise in profits and share price. He is being replaced by Andrew Cosslett, a Cadbury Schweppes executive director.

A spokesman for InterContinental declined to comment on any additional cash return, but said: 'We are delighted with the current healthy interest in the hotels we are selling.'