The announcement that the London-based global operator was planning a sale of the 507-bedroom venue near Hyde Park Corner was made as the company revealed its interim results for the first half of the year to 30 June 2012.
Managed or franchised
The process for the sale, which is expected to be the next major disposal for IHG, is likely to begin following the opening of the InterContinental London Westminster early next year.
A spokesperson for IHG told BigHospitality the sale would form the next major step in the company's asset-light business model. The business will continue to invest capital and launch new brands or strengthen existing ones as opposed to owning properties or holding onto assets.
The majority of IHG hotels, including under the Crowne Plaza, Hotel Indigo and Staybridge Suites brands, are currently managed or franchised.
The final sale figure for the iconic venue, which is built on the site of the Queen's childhood residence, is not yet known however it is believed a significant refurb added to the hotel's value and gave the venue a book value of around £200m in 2006.
Announcing second quarter revenue per available room (RevPAR) growth of 1.9 per cent in the UK, IHG chief executive Richard Solomons said the on-going disposal of the InterContinental New York Barclay hotel was helping to deliver a boost for shareholders.
"Consistent with our asset-light strategy and our strong track record of returning funds to shareholders, we today announce a $1bn return of capital," he said.
Globally IHG delivered RevPAR growth of 6.5 per cent in the first half of the year (6.1 per cent in Q2) while revenue grew by more than 7 per cent to $10.3bn.
"While the global economic environment remains uncertain, IHG continues to trade well and we are confident that our strategy will deliver high quality growth into the future," Solomons added.
The company, which was founded in 2003 after the demerger of the Six Continents business, also revealed its Holiday Inn brand was continuing to outperform.
IHG explained the Holiday Inn and Holiday Inn Express brands were now expected to lead growth in Europe. In the first half of the year, the company opened 16 hotels under the midscale brands across the continent and signed 10 more.
“Expanding in Europe is one of our priorities and there’s plenty of room to grow," Robert Shepherd, IHG’s chief development officer Europe, said. "There’s strong demand among owners and investors for a solid conversion product like Holiday Inn Express as opportunities for new builds in Europe are rare. And among consumers there’s demand for a consistently good midscale offering," he added.
Part of the European strategy for the brands will focus on London with the Holiday Inn London Wembley and Holiday Inn Express London-Excel expected to open in the next twelve months after recent openings in Stratford City and Gatwick.
All of these hotels were opened or will be opened under franchise agreements. There are currently 494 Holiday Inn and Holiday Inn Express properties throughout Europe, with 53 more in the pipeline.