Hotel giant boosted by bid talk

BID rumours pushed shares in InterContinental Hotels higher yesterday in a quiet day on the London stock market. Renewed speculation about a takeover offer for the Holiday Inn operator, which also owns the Crowne Plaza Hotels & Resorts brand, saw the stock gain almost 5 per cent.

Private equity firms and US-based Starwood - best known for Sheraton Hotels - have been mentioned as possible bidders.

The latest share price rise lifted the market value of InterContinental to more than 4.5 billion.

Claire Collingwood, a trader at CMC Markets, said: "The stock currently sits just below 1,300p, and, with 1,500p being seen as a likely bid price, we are still seeing some buyers looking for some further upside."

The group owns, manages, leases or franchises, through various subsidiaries, more than 3,650 hotels and 540,000 guest rooms in nearly 100 countries and territories around the world.

InterContinental was formed by the separation of Six Continents - previously Bass - in April 2003. The restaurant and pubs part of Six Continents became Mitchells & Butlers.

The Holiday Inn brand - one of the world's most recognised - was created in the 1950s by Kemmons Wilson in the US. InterContinental, another of the group's brands, was created by Pan Am in the 1940's, when hotels were built in many Pan Am destinations.

The group has moved away from investing heavily in hotel properties to return to its roots as a hotel franchise and management company with only a few owned assets.

The change of focus has raised an estimated 3bn from property sales since 2003. Many of the hotels have remained under the same brands with management or franchise contracts, creating a future income stream.

In August, InterContinental reported a 30 per cent rise in half-year operating profits to 107 million.