InterContinental Hotels Group is set to sell its flagship Le Grand hotel in Paris to Qatari-backed investor Constellation Hotels for 330 million euros ($440 million), it said on Thursday, raising the prospect
of more cash returns for investors.

The world's largest hotelier said it had received a binding offer for the historic InterContinental Paris, where notable visitors of the past included Russia's last Tsar Nicholas II and British king Edward VII, in a deal that will see IHG manage the hotel for up to 60 years.

The sale, which is not expected to complete until next year, continues IHG's strategy of selling on its hotels and then managing them under contract. The approach has seen the group return some $10 billion to shareholders since 2003, including a $750 million special dividend in May.

Analysts have said the sale of the Paris hotel as well as its InterContinental in Hong Kong could help bring another $1.5 billion of cash returns to shareholders over the next three years.

The price tag for Paris, which had a net book value of $342 million, was slightly low, however, according to Numis.

"The Le Grand is an iconic trophy asset and whilst the takeout multiple of 20 times earnings before interest and tax may seem generous, we consider the sale price to be marginally disappointing," Numis analysts said.  

Shares in the firm, which operates over 4,700 hotels, were down 1.3 per cent at 2,247 pence at 1415 GMT, when London's FTSE 100 index was down 0.2 per cent.

IHG said it expected annual management fees for the InterContinental Paris, which opened in 1862 and has operated under the InterContinental brand since 1982, to be $5 million.

Constellation, which will spend 60 million euros on renovations, also bought IHG's London Park Lane InterContinental and a 80 per cent stake in its Barclay hotel in New York in 2013.

The move comes just days after activist investor Marcato Capital Management said it had hired investment bank Houlihan Lokey to advise it on strategy at IHG, three months after a report that the hotels operator had rebuffed a six billion pounds takeover bid. - Reuters