Hilton ready to sell Scandic

USA-based Hilton Hotels Corporation (HHC) has put its Scandic hotel brand and 10 European properties up for sale in a bid to reduce its $8.4b (£4.4b) debt mountain.

HHC announced it was "exploring strategic alternatives" at the end of last week. It added that it would also consider selling all or part of the Scandic brand, which has 130 mainly leased hotels (23,000 rooms) located primarily in Sweden, Norway, Finland and Denmark.

Hotel consultant Melvin Gold said: "Hilton's acquisition of Scandic in 2001 was opportunistic and it expected to add value. However, Scandic is a regional company and it has been difficult for Hilton to add much to what already existed within the brand."

The European hotels should be put on the market next month. The properties, which are expected to fetch in the region of £200m, are in Belgium, France, Germany, Luxembourg, Spain and Switzerland.

Robert La Forgia, HHC's chief financial officer, said: "Hilton's objective on asset sales is to support our stated strategy of generating a higher proportion of future earnings from managing and franchising hotels and less from hotel ownership."

Gold commented: "Having accomplished the marriage of the two companies, HHC is understandably looking at its asset base and strategy, and confronting its large debt." He added that many hotel companies were looking to offload assets and there were plenty of interested buyers. "It's an opportune time to capitalise and sell some real estate," he said.

French budget hotel group Accor has been linked to the Scandic sale, but declined to comment.

Much of HHC's $8.4b debt was accrued during the $3.3b (£1.74b) acquisition of Hilton International in February.

Since early 2005, HHC has sold more than $1.3b-worth (£686m) of assets, and Hilton International about $700m-worth (£370m).

Citigroup Global Markets is advising Hilton.

By Emily Manson