InterContinental to Market Manhattan Hotel With Revamp PlanZainab Fattah
InterContinental Hotels Group Plc, owner of the Holiday Inn, Crowne Plaza and Hotel Indigo brands, will be ready to sell its New York Barclay hotel this year after completing renovation plans, Chief Executive Officer Richard Solomons said.
“We will go back to the market this year,” the CEO said in an interview in Abu Dhabi yesterday. “Demand for prime real estate assets in major cities is returning, mostly from non-U.S. real estate investment trusts, sovereign wealth funds and wealthy individuals.”
InterContinental took the Manhattan property off the market this year and commissioned the renovation after negotiations on a deal failed. Potential buyers will be presented with plans for the refurbishment at the start of talks, the CEO said. The work will cost more than $100 million.
“We have taken the time to create full refurbishment plans,” he said. “What makes it attractive is the opportunity to enhance the asset, do great refurbishment and create value that way.”
The renovation will include adding more meeting rooms to the H-shaped building, Solomons said. The property was first put up for sale in 2011.
Hotel companies including Starwood Hotels & Resorts Worldwide Inc. are selling their real estate to focus on management. Denham, England-based InterContinental, which owns nine hotels valued at around $1.5 billion, plans to sell all of them, the CEO said. The company manages more than 4,600 properties across the world.
“It creates a bit of schizophrenia if you own too much real estate, because you are competing with other owners and because it internally confuses people,” Solomons said. “Do I buy and invest in something or do I go and get a third party deal? Cleaning that up creates focus.”
InterContinental plans to spend about $200 million on joint ventures involving “small stakes in hotels or the launch of a new brand.” The company tends to sell such assets once the brand is established, he said. Of the 1,050 hotels that make up the company’s pipeline, it has made such investments in about a dozen, he said.
The company has no current plans to raise cash and any future needs would probably be met by funds raised in the capital markets rather than bank loans, the CEO said.
“Today you can’t rely on the banks,” Solomons said. “Even banks you thought were partners are changing their strategy and the governments are forcing them to do things that limit their ability to lend. Going forward, you’ll see a lot more reliance on the capital markets in Europe than you will see in the U.S.”