InterContinental Hotel (LON:IHG) has agreed to sell its famous Hong Kong harbour front hotel for nearly US$1bn.
Even at that price the hotel, which contributed US$42mln of earnings last year, won’t be the finished article for the buyer Supreme Key Ltd, which plans a significant eighteen month refurbishment.
The InterContinental Hong Kong is considered one of the world’s most famous hotels, according to IHG.
Located on the Kowloon waterfront the hotel boast panoramic views of Hong Kong’s Victoria harbour and the City’s skyline, it is host to around 500 rooms as well as three separate Michelin-starred restaurants.
IHG is set to make a profit of around US$700mln on the hotel, which was bought in 2001 (for £241mln), and its services will be retained through a 37-year hotel management contract worth an initial US$8mln per year.
Today’s deal is expected to close in the second half of this year, and it follows a US$450mln deal to sell the Intercontinental Paris Le Grande late in 2014.
IHG told investors it will consider whether or not it will return any proceeds directly to shareholders.
“This transaction completes the disposals of our major owned assets,” said Richard Solomons, IHG’s chief executive.
“Since our formation in 2003 we have disposed of almost 200 hotels for gross proceeds of almost US$8 billion, and have returned over US$10 billion to our shareholders.
“Looking forward, we will continue to focus on the disciplined execution of our winning strategy for sustainable high quality growth."
Supreme Key is a consortium led by Gaw Capital Partners, which includes London’s Lloyds Building and Exchange Tower in its international property portfolio.
In reference to Supreme Key, Solomon added: “We are very pleased to be working closely with a highly regarded hotel investor that will be a great partner for IHG and with whom we look forward to building a successful long term relationship.”