Who has almost half a billion dollars to sink into a New York hotel landmark?
Despite the Barclay’s iconic status, IHG sees the real value in its properties to be on the management side rather than real estate business.
InterContinental Hotels Group is searching for a new buyer for its $300m (£188m) Barclay hotel in New York after exclusive talks, believed to be with Qatari investor Ghanim Bin Saad Al Saad, failed to produce a deal.
Richard Solomons, chief executive of IHG, admitted the collapse of exclusive talks wasn’t “ideal” but said the group had already received a number of expressions of interest from other potential buyers for both the Barclay and the InterContinental Park Lane in London, which will be sold off next year.
The hotels boss insisted there wasn’t a “single issue” that led to the termination of exclusive talks but he hinted price and a requirement to invest at least $100m in refurbishing the 86-year-old Manhattan hotel were a likely sticking point.
“We have been very clear that we are not a forced seller,” Mr Solomons said. “For us it’s about long-term value, the right contract and the right price.”
The group is still keeping the door open to the same buyer but has decided to widen the field to other parties, Mr Solomons said.
IHG, whose shareholders include the US activist investor Nelson Peltz, insisted its failure to close a sale would not impact a $500m share buyback programme, which starts in the fourth quarter.
The hotels giant, which has more than 4,500 hotels worldwide, on Tuesday posted a 1pc increase in third quarter revenue to $473m on pre-tax profits down 23pc to $150m owing to a $56m exceptional credit during the same period in 2011.
Despite the “challenging” economic headwinds battering many of IHG’s markets, Mr Solomons remained upbeat about the group’s ability to continue outperforming the rest of the industry and to drive revenues as it expands rapidly, particularly in China.
Globally it has 1,042 hotels in the pipeline, 40pc of which are already under construction.
But the hotels chief did acknowledge revenue per available room – a key metric in the industry – in China could be impacted for “some months” by imminent changes to the Communist party leadership.
“In China the linkage between business and government is much more than in most other markets so the decisions around activity have all slowed down. Big meetings are not taking place,” Mr Solomons said.
RevPAR in China fell 0.9pc in September and 0.3pc in October, also due to the dispute with Japan over the Senkaku, or Diaoyu, islands in the East China Sea, which prompted a reduction in the number of Japanese tourists to cities such as Hong Kong.
Rival hotels group Starwood, which owns the Sheraton and Westin brands, recently cut its forecast for RevPAR growth due to the slowdown in China.
However, Mr Solomons argued the current issues in China were “short-term” and he was “very, very confident” about the longer-term outlook for the market.
IHG has been accused by the Office of Fair Trading of alleged price-fixing – a charge it refutes.