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
ebooks
ebooksAn introduction to the ground rules of British democracy
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

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Guru Careers: Investment Writer / Stock Picker

Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue