March 28 (Bloomberg) -- InterContinental Hotels Group Plc agreed to sell its London Park Lane Hotel to Middle Eastern investors for 301.5 million pounds ($457 million) as it sharpens its focus on managing properties and brands.
InterContinental, the world’s largest hotel-room provider, will run the 447-bedroom hotel under a 30-year contract and can extend that another 30 years, the Denham, England-based company said in a statement today. The hotel was bought by an affiliate of closely held Constellation Hotels Holding Ltd. for 62 percent more than book value at the end of December, the statement said.
The deal “highlights the value of our asset portfolio and the attractiveness of InterContinental as one of the world’s leading luxury hotel brands,” Chief Executive Officer Richard Solomons said in the statement. “It is another step in our long standing commitment to reduce the capital intensity of IHG.”
London’s luxury-hotel market has been defying Europe’s sovereign-debt crisis and Britain’s struggle for economic growth as overseas visitors drive record sales and occupancy rates, boosting values. The hotel generated $89 million in revenue last year and InterContinental said it expects fees of about 4 million pounds a year from the management agreement.
The London Park Lane, which overlooks Hyde Park and is about a 10-minute walk from Buckingham Palace, opened in 1975. It was once the site of a royal residence and includes a full-service spa, according to the hotel’s web site.
InterContinental, owner of the Holiday Inn and Crowne Plaza brands, said it will have sold 191 hotels for $6.1 billion since becoming an independent company in 2003. The Park Lane deal will give the company an exceptional pretax gain of about $150 million and it will have to pay a onetime tax of about $30 million, according to the statement. InterContinental is also seeking to sell its New York Barclay hotel in the U.S.
About $93 million of the sale proceeds will be used to secure U.K. pension liabilities which were previously backed by the hotel, InterContinental said.
Constellation, based in Luxembourg, bought four French hotels, including the Martinez in Cannes and Paris’s Concorde La Fayette, from a Starwood Capital Group affiliate earlier this year for an undisclosed price, according to a statement at the time. Hyatt Hotels Corp. will manage those properties, the Chicago-based lodging company said in a separate statement.
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