InterContinental investors check in with hopes of £1bn sell-off bonanza

Investors in InterContinental Hotels Group are on course to receive a bumper payout that could reach up to £1bn.

The hotel chain publishes interim results on Thursday and, alongside the numbers, will reveal plans to sell a tranche of UK hotels. It is understood that IHG hopes to raise at least £500m from the move.

The bulk of the cash raised will then be returned to shareholders. In addition to an already announced share buyback of £250m, the total payout could be as much as £1bn.

The move is part of a global review of IHG's 3,500-strong portfolio. The chain is selling off hotels but intends to continue running them through either franchise agreements or management contracts.

Running hotels in this way is seen as more efficient than owning assets outright. However, IHG is thought to be keen to retain ownership of flagship hotels in cities such as Paris, London and New York.

Earlier this year, 20 hotels with a book value of £512m, most of which were in the US, were put up for sale. Another £323m has been raised by selling off hotels such as the InterContinental Mayfair in London and Central Park South in New York. IHG, whose brands include InterContinental, Crowne Plaza and Holiday Inn, refused to comment before the results are published.

Last month, rival Hilton announced an upswing in profits as demand started to strengthen, and analysts expect IHG to do the same. Pre-tax profits are expected to come in around £140m, an improvement on last year's £95m.

The leisure industry has suffered a series of blows over the past few years, including the 9/11 attacks, the economic downturn and the Sars virus. Occupancy rates plunged and prices were slashed. Some destinations remain tough, notably Paris and other parts of mainland Europe, but overall conditions are improving as business travellers and tourists return to cities such as London. Volumes are on the up, although rates have not yet started to rise significantly.

IHG also owns drinks business Britvic but hopes to spin it off early next year.