Six Continents mulls £1bn cash return to investors

The hotel and pubs group Six Continents yesterday pledged to return £1bn to shareholders by the end of the year if it failed to spend its substantial cash pile on a major hotel company.

The group, which owns the InterContinental and Holiday Inn hotel brands, said it was biding its time until hotel valuations had stabilised but intended to act before hotel asset prices recovered. Its shares initially rose 24p on the prospect of the share buyback but closed just 1p higher at 730p.

"Given the sensitivity of private and public valuations to the pace of recovery we believe that there will be opportunities to seek the right investments in a fragmented hotel market," Sir Ian Prosser, the chairman, said.

Richard North, the finance director, said the group had up to £2bn to spend following the sale of its brewing business, Bass, to Belgium's Interbrew in 2000 before it would need to tap the equity markets. He said there was scope to buy back up to £1bn worth of shares if no acquisition could be identified.

Six Continents, which renamed itself last summer, has come under pressure from institutional investors lead by the activist fund manager Hermes to expand its hotels portfolio after last year's takeover talks with Wyndham International, the US hotels group, came to nothing. The group, which also owns more than 2,000 pubs and restaurants, is eventually expected to demerge either its hotels or pubs division and has held talks with Scottish & Newcastle, Britain's biggest brewer, about combining their pub estates.

Analysts were sceptical that Six Continents would find the right deal. "Hotel ratings pretty much recovered by December 2001 so they have missed the boat," said one leisure analyst.

Six Continents yesterday signalled that prospects in the hotel sector had started to recover, reporting stronger trading in March and April driven by growth in business travel. The group predicted that room revenues, which fell by as much as 23 per cent in the first half, would recover by September.

"We have been encouraged by the pace of the recovery in March and April. Although there are short-term problems in long-haul areas such as to key European cities, we have seen a strong uptick in US domestic travel," Tim Clarke, the chief executive, said. The group reported pre-tax profits for the six months to 31 March of £242m compared with £303m the previous year, beating market expectations. Turnover on continuing operations fell to £1.8bn from £2.1bn.

The retail pubs and restaurants division, which includes the All Bar One, O'Neills and Harvester brands, reported an 8 per cent rise in operating profits to £146m. However, analysts said that an underlying sales increase of just 0.2 per cent was "disappointing".

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Sport
football
News
Tangerine Dream Edgar Froese
people
News
Rob Lowe
peopleRob Lowe hits out at Obama's snub of Benjamin Netanyahu
News
Davies (let) says: 'Everybody thought we were having an affair. It was never true!'
people'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Arts and Entertainment
Over their 20 years, the band has built a community of dedicated followers the world over
music
News
Staff assemble outside the old City Road offices in London
mediaThe stories, the writers and the changes over the last quarter of a century at Britain's youngest paper
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
The Oliver twins, Philip and Andrew, at work creating the 'Dizzy' arcade-adventure games in 1988
techDocumentary looks back at origins of the computer-games industry
Arts and Entertainment
Krall says: 'My hero player-singer is Elton John I used to listen to him as a child, every single record
music
Arts and Entertainment
The Wu-Tang Clan will sell only one copy of their album Once Upon A Time In Shaolin
musicWu-Tang Clan and The Sexual Objects offer fans a chance to own only copies of their latest albums
News
i100
Environment
Number so freshwater mussels in Cumbria have plummeted from up to three million in the 20th century to 500,000
environment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us