January 19, 2001 - HVS International
The Hilton Group is reported to be at an advanced stage in talks to raise up to £500 million from the sale of some of its UK hotel assets, while retaining the management contracts. Potential bidders for the hotels include property investment groups and pension funds such as Norwich Union, London & Regional, Strategic Hotel Capital, Nomura, and Marylebone Warwick Balfour.
Hilton is keen to readdress its balance of hotel asset ownership of £700,000 overseas compared with £1.9 billion in the UK. According to Hilton's Chief Executive, David Michels, the internal rate of return on new build properties overseas tends to be greater than in the UK. Recently, Hilton purchased the Sydney Capital Centre, which included the Hilton Sydney, for £70 million, invested £60 million in building a Hilton in Sao Paulo and plans to build a 288-bedroom Hilton in Moscow on the site of the Inturist Hotel, due to be demolished.
Furthermore, the Hilton Group, no longer considered to be in the running for the Granada hotel portfolio, is keen to snap up individual Forte Hotels that may be disposed of separately following the auction. Hilton has plans to expand its portfolio by 20% over the next three years. An announcement concerning the disposal of the hotel assets is expected next month when Hilton reports its 2000 results.
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