Intercontinental Hotels Group PLC (IHG) [LON:IHG) is expanding its luxury footprint with the acquisition of a 51% stake in Regent Hotels and Resorts for US$39mln in cash via a joint venture with Formosa International Hotels Corporation.
The FTSE 100-listed firm said it will have the right to acquire the remaining 49% interest in a phased manner from 2026 which, based on a trailing twelve-month multiple of joint venture income, would result in a payment of less than US$100mln.
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IHG said its intention is to grow the luxury brand from six hotels currently to over 40 hotels in key global gateway city and resort locations over the long term.
The Holiday Inn said the acquisition of Regent is part of one of its new strategic initiatives focused on continuing to expand its footprint in the fast-growing US$60bn luxury segment.
Keith Barr, IHG’s chief executive officer, said: “We see a real opportunity to unlock Regent's enormous potential and accelerate its growth globally.
“In addition, by creating a dedicated luxury division, we will be bringing together some of the most experienced and respected people in the industry who will help drive our luxury offer, ensuring that our existing luxury brands continue to evolve and allowing us to bring in new brands such as Regent to enhance our brand portfolio."
The group expects the Regent Hotels transaction to close during the second quarter of 2018.
IHG also announced that, following an extensive refurbishment due to commence in early 2020, InterContinental Hong Kong will become a Regent Hotel in early 2021.