Hilton Group to sell hotels business to sister company in the US

London: The Hilton Group, UK, is in talks to sell its international hotels business after receiving an indicative offer from sister group Hilton Hotel Corporation, which controls the brand in the US.

The deal, thought to value London-listed Hilton at £3.6bn, would split the business from the group's other main division, betting shop chain Ladbrokes.Weak trading conditions in Britain, and in London in particular since July, would need to be reflected in any offer. Industry revenues per available room - an important measure for hotel groups - was down by 10% in August.

In common with other European hotel firms, Hilton Group has been shedding property assets and moving to the kind of management and franchised business model which has long been the norm in the US. Hilton Corporation will be attracted by the international business's lower tax rate of 20 per cent. Marriage talks between the two groups follow a lengthy engagement, which started eight years ago with a marketing alliance. David Michels from Hilton Group and Hilton Corporation chief executive Stephen Bollenbach sit as non-executive directors on each other's boards and have overseen a gradual strengthening in ties between the two firms.

The 500 hotels which operate under the Hilton flag are supported by a unified sales force, reservation system and - most profitably - a single loyalty programme. The ties have benefited all 2,700 hotels within the two businesses.

The Hilton empire was founded in San Francisco by Conrad Hilton in 1919 but did not start expanding beyond America until 30 years later. In 1964, the company split in two, with Hilton Group focusing on growth in what have become known as "gateway cities" outside the US.

In 1987 the international business was acquired by Ladbrokes, which was then made up of a broad conglomerate of leisure businesses. A decade later the two groups signed a marketing alliance - a deal widely seen as a prelude to a merger.