IHG 'unlikely' to pursue Fairmont Raffles auction opportunity

The Fairmont Raffles hotel chain (FRHI)) seems unlikely to be sold to InterContinental Hotels Group (IHG), financial analysts have said. City of London financiers have estimated FRHI, which has 116 hotels in 34 countries, could fetch US$3bn. The auction is being arranged by Deutsche Bank on behalf of the owners, who include the Qatari government. IHG, owner of the Holiday Inn and Crowne Plaza brands, ruled itself out of the purchase of Starwood, a rival hotel chain, earlier this year and City sources predict IHG is now more likely to return as much as £1.5bn to investors in the New Year. The group’s recent sale of InterContinental Hong Kong for US$929m marked the successful conclusion of its main asset sales as the hotel group moves towards an asset-light management model. IHG is said to receive more than 95% of profits from management fees. IHG performing more strongly in its European hotels compared with its performance in China and the US, which slowed in the third quarter. The group’s shares strengthened markedly on the London stock market this week, adding 173p to £24.83, while revenue per available room (RevPAR) has held up well in the latest quarterly figures from IHG. Businesses such as IHG have been hailed as good indicators of economic activity because they rely heavily on the business traveller.