IHG PLC Return of Capital

InterContinental Hotels Group PLC
03 May 2005

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                       INTERCONTINENTAL HOTELS GROUP PLC

                                   3 MAY 2005

Return of approximately £1 billion to shareholders by way of a capital
reorganisation



The Board of InterContinental Hotels Group PLC ("IHG" or the "Company") today
announces it is sending a circular (the "Scheme Circular") to its shareholders
setting out full details of the proposed return of approximately £1 billion to
shareholders (the "Proposal").  This follows the Board's announcement on 10
March 2005 of its intention to return surplus capital to shareholders subject,
as announced on the same date, to the completion of the UK hotels disposal.



In order to implement the Proposal, the Board is seeking shareholder approval
and the sanction of the Court to introduce a new listed parent company - New
InterContinental Hotels Group PLC ("New IHG") - to the IHG Group and to return
the capital to shareholders by way of a scheme of arrangement (the "Scheme").
Shortly after the Scheme becomes effective, it is proposed to seek a further
sanction of the Court to reduce the capital of New IHG.  This allows the
creation of distributable reserves in New IHG providing additional financial
flexibility going forward.  Listing particulars have been prepared in connection
with the admission of New IHG to the Official List of the UK Listing Authority
(the "Listing Particulars").  Citigroup is acting as financial adviser to IHG
and as sponsor to New IHG on the transaction.



The introduction of New IHG is purely a structural change needed to implement
the Proposal and the management and business of the Group will not change as a
result.  It is intended that, subject to the Scheme becoming effective, New IHG
will, with effect from the date of admission to the Official List of the UK
Listing Authority, adopt the name 'InterContinental Hotels Group PLC' to reflect
this continuity.



If the Scheme is implemented, Shareholders will receive 11 New IHG ordinary
shares in exchange for every 15 IHG ordinary shares, and £1.65 in cash for each
existing ordinary share they hold.  The cash amount to be returned to
shareholders is expected to be sent by cheque or credited to CREST by 8 July
2005.  Shareholders will still own the same proportion of New IHG, subject to
fractional entitlements, after the implementation of the Proposal as they held
in IHG immediately before the implementation of the Proposal.



Expected timetable



The following is the indicative timetable of the principal events connected with
the Proposal:


Completion of the UK hotels disposal                                    Late May
AGM, Court Meeting and EGM                                                1 June
Court Hearing of the petition to sanction the Scheme                     24 June
Last day of dealings in existing ordinary shares/ADSs                    24 June
Dealings in New IHG ordinary shares and ADSs commence                    27 June
Court hearing for reduction of capital of New IHG                        29 June
Reduction of capital becomes effective                                   30 June
Despatch of share certificates for New IHG ordinary shares and         By 8 July

cheques in respect of the Return

(or crediting to CREST accounts, as appropriate)



If any of the above dates change, the revised dates will be notified to
Shareholders by announcement through the Regulatory Information Service of the
London Stock Exchange.



In relation to the current trading of IHG, the Scheme Circular and Listing
Particulars state:



"At the announcement of the preliminary results for the Group on 10 March 2005,
the following information was provided on the current trading of the Hotel
Business:



The Group has seen encouraging performance in the US.  The key midscale brands,
Express and Holiday Inn, are showing rate growth.  Crowne Plaza RevPAR is
growing strongly, driven by strong performance in the meeting segment and the
InterContinental brand is delivering strong results in key cities (e.g. New
York).  The UK, and particularly London, is showing strong RevPAR growth, driven
by the corporate segment.  The Group is seeing continued weakness in some
Continental European markets (e.g. France and Benelux) but Germany is showing
some positive signs.  The Group's business in the Middle East continues to
deliver positive results, while the InterContinental Hong Kong had a good start
to the year with double-digit RevPAR growth and mainland China also performed
strongly.



Also as part of the presentation of the preliminary results, information was
provided in relation to the Britvic Business.  Turnover increased by 5 per cent.
for the full financial year, with volume up by 2 per cent., but operating profit
had reduced by 4 per cent., affected by investment in the business, pensions
costs and poor weather.  Capital expenditure is, however, expected to be less in
2005, and the year started positively with volume increases over the previous
year, and several initiatives planned with the intention of increasing profit
and tightly controlling costs.



Based on the information available to Directors on 3 May 2005, the Directors
believe that there has been no material change in the broad trend of current
trading since 10 March 2005 and the outlook for the Group's trading for the full
financial year remains in line with the Directors' expectations."



The Scheme Circular will be posted to shareholders today.  The Listing
Particulars will shortly be available for inspection at the UK Listing
Authority's Document Viewing Facility which is situated at: Financial Services
Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS, telephone 020
7066 1000.  In addition, the Scheme Circular and Listing Particulars will
shortly be available from the company website (www.ihgplc.com) or can be
obtained from the Company's registered office (67 Alma Road, Windsor, Berkshire
SL4 3HD).



Citigroup Global Markets Limited is acting for IHG and New IHG and no-one else
in connection with the Proposal and will not be responsible to anyone other than
IHG or New IHG for providing the protections afforded to its clients or for
providing advice in relation to the Proposal or the contents of this
announcement.



This announcement does not constitute an offer or invitation to purchase
securities.



Securities may not be offered or sold in the United States unless they are
registered under the U.S. Securities Act of 1933, as amended (the "Securities
Act") or exempt from such registration.  The new ordinary shares have not been,
nor will be, and are not required to be registered with the US Securities and
Exchange Commission under the Securities Act in reliance on the exemption from
the registration requirements of the Securities Act provided by Section 3(a)(10)
thereof.  US shareholders who are affiliates of IHG or New IHG before
implementation of the Scheme or are affiliates of New IHG after implementation
of the Scheme will be subject to timing, manner of sale and volume restrictions
on the sale of new ordinary shares received in connection with the Scheme under
Rule 145(d) of the Securities Act.



For further information, please contact

InterContinental Hotels Group



Media Enquiries

Leslie McGibbon                                           [phone]

                                                          [phone]


Investor Relations

Gavin Flynn, Paul Edgecliffe-Johnson                      [phone]

                                                          [phone]

Note to Editors:



InterContinental Hotels Group PLC of the United Kingdom (LON:IHG, NYSE:IHG
(ADRs)) is the world's largest hotel group by number of rooms.  InterContinental
Hotels Group owns, manages, leases or franchises, through various subsidiaries,
more than 3,500 hotels and 534,000 guest rooms in nearly 100 countries and
territories around the world. The Group owns a portfolio of well recognised and
respected hotel brands including InterContinental(R) Hotels & Resorts, Crowne
Plaza(R) Hotels & Resorts, Holiday Inn(R) Hotels and Resorts, Holiday Inn
Express(R), Staybridge Suites(R), Candlewood Suites(R) and Hotel IndigoTM, and
also manages the world's largest hotel loyalty programme, Priority Club(R)
Rewards, with 23.7 million members worldwide. In addition to this,
InterContinental Hotels Group has a 47.5% interest in Britvic, one of the two
leading manufacturers of soft drinks, by value and volume, in Great Britain.



InterContinental Hotels Group offers information and online reservations for all
its hotel brands at www.ichotelsgroup.com and information for the Priority Club
Rewards programme at www.priorityclub.com.



For the latest news from InterContinental Hotels Group, visit our online Press
Office at www.ihgplc.com/media.




                      This information is provided by RNS
            The company news service from the London Stock Exchange              EVIVIIE