InterContinental Hong Kong sells for US$938 million in one of region’s biggest hotel deals

InterContinental Hotels Group (IHG) has agreed to sell its only wholly owned asset in the China market, the InterContinental Hong Kong in Tsim Sha Tsui, for US$938 million, one of the biggest hotel deals in terms of transaction value in Hong Kong’s history.

IHG, the world’s largest hotel group by room numbers, said it agreed to sell its ownership interest in InterContinental Hong Kong to Supreme Key, a consortium of investors advised and managed by Gaw Capital Partners, for US$938 million.

IHG will retain a 37-year management contract on the 503-room hotel, with three 10-year extension rights, giving an expected contract length of 67 years. Management fees payable to IHG are initially expected to be about US$8 million a year, increasing following the refurbishment, according to the announcement by IHG.

This is the latest in a string of hotel asset deals in the city. Hong Kong-listed New World Development (NWD) on April 30 announced that the company and its controlling shareholder, Chow Tai Fook Enterprises, entered into an agreement with Abu Dhabi Investment Authority (ADIA), one of the world’s largest sovereign wealth funds, to establish a new joint-venture company to own the Grand Hyatt Hong Kong and Renaissance Harbour View in Wan Chai and Hyatt Regency in Tsim Sha Tsui. That deal involved HK$18.5 billion.

JLL predicts global hotel the real estate transaction volume would reach US$68 billion this year. This would represent a 15 per cent increase on 2014 levels and the third biggest annual total on record.

The hotel group said the transaction completes the disposals of our major owned assets.