|By Sarah Bridge, Financial Mail on Sunday, London|
Knight Ridder/Tribune Business News
Aug. 1, 2004 - Hotels group InterContinental is understood to be considering a UKpound 1 billion sale of its UK assets following the success of its disposal programme in America.
The group, which demerged from leisure giant Six Continents in April last year alongside pubs group Mitchells & Butlers, owns and manages more than 3,500 hotels across the globe.
These include the Holiday Inn, Holiday Inn Express and Crowne Plaza brands.
Since the demerger, InterContinental has already sold or put up for sale UKpound 1 billion worth of assets, mainly in North America. Twenty-eight hotels have already been sold, raising more than UKpound 320 million.
Financial Mail understands that the company is considering selling off almost all of its UK assets while continuing to manage or franchise the hotels. A similar strategy has been adopted by rival hotel groups including Marriot and Ramada Jarvis.
InterContinental has 200 properties in Britain and Ireland. About 90 are thought to be owned by the company.
It would not comment on any plans for the UK market. A spokesman said: "There will be an update on the progress of the asset disposals and potential of further disposals when our interim results are announced on September 9."
But the group is believed to be considering the sale of all its owned hotels except for the flagship building overlooking London's Hyde Park.
Worldwide, the company could end up owning just 20 hotels and managing or franchising the rest.
Announcing a wave of asset sales last month, chief executive Richard North said: "It is a further step in our strategy of reducing the capital intensity of the business and enhancing return on capital."
Money raised from the disposals so far is being returned to shareholders by a share buyback and InterContinental has purchased UKpound 138 million as part of the UKpound 250 million buyback programme.
The company is understood to be considering a special dividend if it is unable to return all the cash raised to shareholders through buybacks.
-----UKpound preceding a numeral refers to the United Kingdom's pound sterling.
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