HILTON Group, the hotel and betting shop operator, is to put a further £400 million to £500 million-worth of hotels up for sale, including the 1,058-room Hilton London Metropole, one of Europe’s biggest hotel and conference centres.

The company, which separately is in talks to sell its entire hotel division to Hilton Hotels Corporation, its American marketing partner, expects to put a total of about five UK hotels on the market early next year, including the 794-room Hilton Birmingham Metropole.

In addition, it is seeking to sell a small number of overseas hotels, including the Hilton Luxembourg and the Hilton Durban, together worth an estimated £40 million. As with the British hotels, Hilton is looking to continue running them under a so-called sale and manage-back.

The announcement came as Hilton confirmed that it had completed the sale of 15 UK hotels, including the Hilton London Olympia, in a £382.4 million sale and manage-back. The purchaser, which is backed by Royal Bank of Scotland, is the Managed Hotels Unit Trust, a vehicle set up by an Israeli investor.

The Times understands that the investor is Egal Ahouvi, an Israeli lawyer, who has bought several commercial properties in the UK over the past few years. He is said to buy mainly on behalf of Israeli pension funds, which like the security offered by buildings with a strong income stream.

The 15 hotels that Mr Ahouvi is buying form part of a package of 18 hotels put up for sale by Hilton in July through CB Richard Ellis Hotels, the property agent. He is also close to acquiring a sixteenth unit, the Hilton Edinburgh Airport, for an estimated £14 million, but two other Hiltons in Northern Ireland have now been taken off the market.

Under the terms of the sale and manage-back, Hilton will continue to run the hotels for an initial term of 30 years, with an option to extend.

Brian Wallace, Hilton’s finance director and deputy chief executive, said that, taking into account the annual management fee of about £5.4 million that it will continue to receive, the company was pocketing the equivalent of 12.8 times forecast 2005 earnings before interest, tax, depreciation and amortisation of £35.3 million.

Shares of Hilton, which also owns the Ladbrokes gambling empire, added 4¾p to 341¾p. The share price has been buoyed by the revelation last month that it was in talks to sell its hotel division to Hilton Hotels Corporation for about £3.6 billion.

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