Six Continents demerger plan could cost jobs

Job cuts are forecast at Six Continents as a result of the planned demerger between its hotels and retail (restaurant and pubs) divisions.

The company, whose brands include InterContinental and Holiday Inn hotels and pub brands All Bar One and Harvester, is carrying out an "oranisational review" as it prepares to separate from its retail division.

"There will be some jobs that will no longer exist as a result, but I can't say how many," said Richard North, group finance director, who would become chief executive of hotels, once the demerger was complete.

Splitting the divisions into two companies to be listed on the UK stock market as separate entities would cost the company more than £70m.

The moves come at a difficult time for the company, following what the group described as "one of the toughest trading periods ever" as it reported its year-end results last week.

Turnover at the group's hotels fell by 21% to £1.5b during the year, compared with £1.9b in 2001. Operating profits fell by almost 37% to £262m, against £427m a year earlier.

Six Continents' retail business, which includes its pubs and bars and restaurant operations, saw turnover in its continuing operations increase by 5.7% to £1.5b during the period, compared with £1.4b in 2001. Operating profit was up by 5.1% to £228m. Including figures from the group's inns division, which it no longer operates, turnover fell by 5.3% and operating profit dropped by 5.6%.

The group saw some fall-off in trading in October and November, particularly in London and on high streets in the rest of the UK, but added that sales from its pubs and restaurants in residential areas outside London, which make up 60% of sales in the division, had been resilient.

by Christina Golding