InterContinental Hotels Group PLC (“IHG”) today announces it has agreed the acquisition by Strategic Hotel Capital, Inc. (“SHC”) of 85% interests in two hotels in the United States. IHG will receive approximately $287m in cash (before transaction costs) based upon a total value for both hotels of US$303.5m, $12m in excess of net book value.

The two hotels, the InterContinental Chicago (807 rooms) and the InterContinental Miami (641 rooms), will continue to be managed by IHG under new 20 year management contracts. IHG has three consecutive options of ten years each to renew the management contracts, giving a total potential contract length of 50 years.

The transaction is expected to complete in the first half of 2005, with IHG retaining a 15% ownership interest in two partnerships that hold the two hotels.

Richard Solomons, finance director of IHG, commented:

"By retaining high quality management contracts, this deal ensures long term representation of the InterContinental brand on these landmark properties and reinforces our position as a manager of top quality international hotels. This also enables us to free up capital from our real estate in a value-creative way, and to extend our good relationship with Strategic Hotel Capital."

Further transaction details

1. The management contracts signed in respect of the InterContinental Miami and the InterContinental Chicago will generate ongoing management fees for IHG, consisting of a base fee calculated as a rising percentage of revenues and an incentive fee based on hotel cashflow, and additionally a partnership return from its 15% retained interest.
2. The tax potentially payable on these transactions has already been largely provided for. The 2005 tax charge to the profit and loss arising from the transaction should not exceed $13m and the cash tax payable in 2005 should not exceed $6m.
3. The partnerships will be approximately 65% debt financed. IHG’s interests in the partnerships have a book value of $16m.

Since Separation in April 2003, IHG has disposed of or agreed to dispose of 47 hotels (including those in today’s announcement) with proceeds of approximately £730m. 90 properties remain on the market with a net book value of £1.5 bn.

Transactions announced today: 85% interests in two hotels, 1,448 rooms, based on total value for the two hotels of $303.5m.

InterContinental Hotels Group PLC of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world’s largest hotel company by number of rooms. InterContinental Hotels Group franchises, manages, leases or owns, through various subsidiaries, more than 3,500 hotels and 536,000 guest rooms in nearly 100 countries and territories around the world. The Group owns a portfolio of well recognised and respected hotel brands including InterContinental® Hotels & Resorts, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites®, Candlewood Suites® and Hotel IndigoTM, and also manages the world’s largest hotel loyalty program, Priority Club® Rewards, with more than 23 million members worldwide. In addition to this, InterContinental Hotels Group has a controlling interest in Britvic, the second largest soft drinks manufacturer in the UK.

Leslie McGibbon (IHG)
+44 (0) 1753 410 425
IHG