Starwood Hotels and IHG discuss link-up in early stage talks

InterContinental Hotels (IHG) has held early-stage talks with Starwood Hotels & Resorts over a union to create the world's largest hotel group, according to two people familiar with the discussions.

The informal talks were very tentative and Starwood may choose another suitor or pursue another strategy, both people cautioned.

Starwood may be conducting parallel talks with other interested parties, one person added, with candidates likely to include US hotel group Wyndham.

Starwood in effect put itself up for sale in April, appointing Lazard to explore a "full range" of strategic and financial options. The move came after Frits van Paasschen, Starwood's former chief executive, quit in February as the company struggled to maintain growth.

Starwood is hoping to decide on a path by the end of the year but offered no guidance at its second-quarter results yesterday.

Organic growth

Richard Solomons

, IHG chief executive, declined to comment as he reported a 21.5 per cent rise in first-half pre-tax profits to $458 million (€419m). Starwood declined to comment.

Mr Solomons said that IHG’s strategy was to grow organically. He said that the company had signed deals to manage 231 hotels in the first half.

Starwood's market capitalisation is $13.8 billion, while IHG's is roughly $9.5 billion. – The Financial Times Limited