Asset-light IHG’s sights on management rather than Fairmont Raffles

The Fairmont Raffles hotel chain (FRHI)), currently up for sale, with City financiers estimating it could fetch over £2bn, is thought unlikely to be attracting bid interest from InterContinental Hotels Group (IHG). FRHI has 116 hotels in 34 countries.

The auction is being arranged by Deutsche Bank on behalf of the owners, who include the Qatari government, but IHG, owner of the Holiday Inn and Crowne Plaza brands, is thought no longer to be among the likely bidders, having ruled itself out also of the purchase of Starwood, a rival hotel chain, earlier this year.

IHG, according to City sources, is more likely to return as much as £1.5bn to investors in the New Year.

The group’s recent sale of InterContinental Hong Kong for US$929m marked the successful conclusion of its main asset sales as the hotel group moves towards an asset-light management model. IHG is said to receive more than 95% of profits from management fees.

IHG performing more strongly in its European hotels compared with its performance in China and the US, which slowed in the third quarter.

The group’s shares strengthened markedly on the London stock market this week, adding 173p to £24.83, while revenue per available room (RevPAR) has held up well in the latest quarterly figures from IHG.

The Times newspaper’s Tempus column noted this week that businesses such as IHG “are good indicators of economic activity because they rely heavily on the business traveller”.

Paul Colston

Author

Paul Colston

Managing Editor, Conference News & Conference & Meetings World.

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