LONDON--InterContinental Hotels Group PLC (IHG.LN) Tuesday pointed to a recovery in the international hotel market as it said it will push ahead with the sale of its flagship New York Barclay and InterContinental Park Lane hotels.
The company first flagged the sale of the 87-year old New York Barclay hotel in 2009, but the sale was put on hold in 2011 as market conditions deteriorated.
But as demand from business travellers returns apace, and demand increases for flagship real estate assets, fuelled by sovereign wealth funds and wealthy overseas investors looking for strong returns and trophy assets, the "optimum market conditions' that IHG was waiting for have started to arrive.
"We understand demand for the London asset has been strong and would anticipate management are positive on the likelihood of selling in 2013," says Liberum Capital analyst Patrick Coffey.
The New York Barclay is expected to fetch around $350 million while the InterContinental Park Lane is valued at around GBP250 million ($387 million).
The sales fit IHG's strategy of selling key assets to generate cash to grow the business further or to return to shareholders.
Six months ago it signalled the return of $1 billion to shareholders. Around two thirds of IHG's profit is generated in the U.S., where hoteliers say demand, predominantly from business travellers, is outstripping supply helping to push up room prices.
IHG plans to open another 26,000 rooms in the Americas this year -- more than any other region -- as the relaunch of its Holiday Inn brand in the U.S. gathers pace.
The strong U.S. performance helped boost IHG's net profit in the year to end-December 18% to $544 million from $460 million a year earlier. Revenue rose 4% to $1.84 billion while operating profit rose 10% to $614 million, beating expectations of $605 million.
Global constant-currency revenue per available room--a key industry measure--was up 5.2%, led by 6.3% growth in the U.S. and 5.4% growth in Greater China. On the same basis, global revenue in January was up 6.6%.
But in China, a key growth market for IHG, fourth-quarter revenue fell 0.3% due to "the ongoing industry-wide impact of the China-Japan territorial island dispute, the political leadership change and the broader economic slowdown across the region."
However, growth returned in January when revenue soared 21% helped by the Chinese New Year holiday.
Like its peers, IHG--which has midscale Holiday Inn and upscale Crowne Plaza in its stable of brands, as well as China's Hualuxe chain--is ramping up its business in the word's fast-growing economies, to take advantage of rising incomes of international travellers and expansion of low-cost airlines.
IHG recommended a full-year dividend of 64 cents a share, up 16%. The stock closed Monday at 1989 pence.
nasdaq.com
The company first flagged the sale of the 87-year old New York Barclay hotel in 2009, but the sale was put on hold in 2011 as market conditions deteriorated.
But as demand from business travellers returns apace, and demand increases for flagship real estate assets, fuelled by sovereign wealth funds and wealthy overseas investors looking for strong returns and trophy assets, the "optimum market conditions' that IHG was waiting for have started to arrive.
"We understand demand for the London asset has been strong and would anticipate management are positive on the likelihood of selling in 2013," says Liberum Capital analyst Patrick Coffey.
The New York Barclay is expected to fetch around $350 million while the InterContinental Park Lane is valued at around GBP250 million ($387 million).
The sales fit IHG's strategy of selling key assets to generate cash to grow the business further or to return to shareholders.
Six months ago it signalled the return of $1 billion to shareholders. Around two thirds of IHG's profit is generated in the U.S., where hoteliers say demand, predominantly from business travellers, is outstripping supply helping to push up room prices.
IHG plans to open another 26,000 rooms in the Americas this year -- more than any other region -- as the relaunch of its Holiday Inn brand in the U.S. gathers pace.
The strong U.S. performance helped boost IHG's net profit in the year to end-December 18% to $544 million from $460 million a year earlier. Revenue rose 4% to $1.84 billion while operating profit rose 10% to $614 million, beating expectations of $605 million.
Global constant-currency revenue per available room--a key industry measure--was up 5.2%, led by 6.3% growth in the U.S. and 5.4% growth in Greater China. On the same basis, global revenue in January was up 6.6%.
But in China, a key growth market for IHG, fourth-quarter revenue fell 0.3% due to "the ongoing industry-wide impact of the China-Japan territorial island dispute, the political leadership change and the broader economic slowdown across the region."
However, growth returned in January when revenue soared 21% helped by the Chinese New Year holiday.
Like its peers, IHG--which has midscale Holiday Inn and upscale Crowne Plaza in its stable of brands, as well as China's Hualuxe chain--is ramping up its business in the word's fast-growing economies, to take advantage of rising incomes of international travellers and expansion of low-cost airlines.
IHG recommended a full-year dividend of 64 cents a share, up 16%. The stock closed Monday at 1989 pence.
nasdaq.com
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