• InterContinental takeover talk continues

Yesterday's results from InterContinental followed the healthy trend set by its rivals -Marriott, Hilton and Starwood – with a rise of 40% in continuing operating profit.

But unlike its North American peers, the UK-listed operator continues to be discussed as possible prey rather than predator.

CEO Andrew Cosslett admits that his current share price has an element of bid premium priced into it. And many believe that as the group brings to an end its disposal programme, it will make an increasingly tempting target.

This particular story, however, is beginning to sound a little hoary. Ever since InterContinental flunked its opportunity to be a consolidator, back when it was Six Continents and still married to its pub wing, slide rules have been all over its portfolio.

But aside from the opportunistic punt by Hugh Osmond when InterContinental separated from its pub retailing brother, there has been no other tabled offer.

The favourite candidates to make a buy are private equity groups but it is becoming increasingly hard to see how any turn can be made with the asset-light InterContinental portfolio.

Leaving aside the fact that the management team at InterContinental are in no mood to sell – and few private equity players want to go hostile – there is the not inconsiderable issue that the value locked-up in InterContinental's property has been all but crystallised.

Since the asset disposal programme started in earnest three years ago, some £2.5bn of hotel property has been sold. Currently on the market is £400m worth of assets in the form of seven InterContinentals in Europe.

Being retained is just £900m of InterContinentals in what the company regards as key locations. This is not the kind of asset base that could underpin the usual tilts at hotel groups undertaken by private equity.

Perhaps it is not surprising that it is Permira, the venture capital owner of asset light budget chain Travelodge, which is most often tipped as a likely buyer as it appears comfortable with the pure brand and operating model already.

But Permira made its acquisition while Travelodge still had a substantial asset base. This enabled it to partially cash out via a £400m sale and leaseback.

In any case, current best guesses are sticking a heady price on any possible takeover that may leave insufficient wriggle room for the venture capitalists. Analysts at UBS estimate that any bidder will need to find up to 1400p per share, a hefty hike on yesterday's 958.5p close.

The situation appears only a little more promising for trade buyers. While at first glance the overflowing war chests of Marriott and Starwood Hotels suggest that a bid is simply waiting to happen, the reality is likely to be a lot messier.

Marriott, for example, has little need for anything but the upscale InterContinental portfolio and possibly a refreshed Holiday Inn. Express conflicts with Courtyard in the US and Crowne Plaza delivers nothing not already there far more strongly with Marriott core brand.

Starwood faces the same problem with Crowne Plaza, although it could well welcome the opportunity to move convincingly into midscale with Holiday Inn and Express.

It may well be the case that InterContinental can escape predatory clutches just as its former pub operations, now known as Mitchells & Butlers, this month saw off a takeover by private equity. Would-be bidders look likely to have left it too late to make a move, at least in the short-term.

In the meantime, InterContinental is focused on delivering its growth that will keep it out of reach. So far, it is barely standing still in terms of room additions. During the quarter it added 8,343 rooms but saw 8,332 rooms exit its system.

Cosslett points to the rooms pipeline, now 116,964-strong, as evidence that growth will shortly start being delivered. He said that on average a signed hotel spends nine quarters in the pipeline. With the new growth regime barely a year old, it will take a year to see whether the promise shown by this pipeline comes to fruition in the form of system growth.

The results showed revpar up 13.0% in the Americas, 8.7% in EMEA and 8.8% in Asia Pacific. The company said during its conference call that the shift in the date of the Easter holidays did not significantly affect trading results.

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