By Adrian Maties, Associate Editor
InterContinental Hotels Group PLC is getting ready to sell its historic InterContinental Paris – Le Grand Hotel. The company announced it has received an offer from Constellation Hotels Holding Ltd., a subsidiary of Qatar Holding, to buy the property. The proposed purchase price is €330 million, or about $442 million, payable in cash at completion.
The InterContinental Paris – Le Grand Hotel was built by the Pereire brothers and designed by Alfred Armand. Construction started in 1861 as part of the complete reconstruction of Paris supervised by Baron Haussmann, and the hotel opened the following year. It was inaugurated by Empress Eugenie, the wife of Napoleon III. At that time, the hotel had 800 rooms. Over the years, it hosted several famous historical figures, such as Tsar Nicholas and Tsarina Alexandra, King Edward VII of England, Queen Rania of Jordan and Victor Hugo.
The hotel has operated under the InterContinental brand since 1982. It offers 470 guest rooms, including 70 suites, and is located right in the heart of Paris, overlooking the Opera House. Amenities include 23 meeting rooms with more 24,300 square feet of space, two restaurants, a cocktail lounge, a spa, a business center and more.
InterContinental Hotels Group said that the hotel generated revenues of $118 million last year, as well as EBIT of $22 million. As of June 30, 2014, its net book value was $342 million.
The sale is not expected to be complete until next year. According to the terms of the offer, InterContinental Hotels Group would retain a 30-year management contract, with three 10-year extension rights at the company’s discretion, giving an expected contract length of 60 years. Management fees are expected to be €4 million, or about $5.3 million per year. Constellation also plans to invest about €60 million to renovate the trophy property.
“The InterContinental Paris – Le Grand is an exceptional property and is an iconic hotel in our portfolio. This announcement demonstrates the continued successful implementation of our asset-light strategy and the strength of our relationship with Constellation, following its recent purchase of InterContinental London Park Lane and its majority investment in InterContinental New York Barclay. This potential transaction is yet another example of the enduring appeal of InterContinental as one of the world’s leading luxury hotel brands,” Richard Solomons, CEO of IHG, said in a statement for the press.
The offer marks the second time this year that InterContinental Hotels and Constellation have gotten together to talk business. A few months ago, Constellation Barclay Holding US L.L.C., an affiliate of Constellation Hotels Holding Ltd., acquired an 80 percent stake in Manhattan’s historic 685-room InterContinental New York Barclay. InterContinental Hotels received $240 million and will retain the remaining 20 percent.