The UK's Compass Group raised more than �1bn on Wednesday from the sale of its Posthouse and Heritage hotel chains.

Leisure group Bass snapped up Posthouse in a �810m deal, while the 48 Heritage hotels were sold to Scotland's Macdonald Hotels, in a joint venture with Bank of Scotland for �235m.

Bass, which owns Holiday Inn and Inter-Continental hotels, will rebrand most to Holiday Inns and sell off 15 which are unsuitable or too close to its existing hotels.

The deal represents another stage in the repositioning of Bass, which last year sold its brewing business for �2.3m.

Driving sales

The Posthouse portfolio consists of 79 mid-market hotels in the UK and Ireland, with more than 12,000 rooms.

The Posthouse hotels are mostly situated close to motorways and airports.

They achieved an operating profit of �110m in the year to 30 September.

Bass plans to use Holiday Inn's sales force and global reservation system will further drive up sales.

'Jewel in the crown'

The Posthouse sales comes just a week after Compass completed the disposal of its London Signature brand, which includes the Cavendish Hotel and the Cumberland Hotel, for a total of �315m.

Compass decided to sell-off its hotels to concentrate on catering last year, after it was spun-off from the Granada group.

It is expected to complete its hotel auction by selling its 146-strong Meridien luxury chain, which includes London's Grosvenor House, at a price of around �2bn to the US hotel group Marriott by mid-April.

The sale of Meridien, seen as the "Jewel in the Crown" of the old Forte empire, is likely to bring the complete Compass hotel sell-off close to its target of �3.5bn after a six-month auction process.

Compass plans to reinvest the proceeds in its continuing operations.

Compass shares edged up 8p to 515p by 1315 GMT on relief it had struck prices in line with expectations.

It now faces selling the Meridien chain with hotel prices coming under pressure from the threat of a global slow-down.

"Compass has completed the hard bits of its hotel auction at prices in line with expectations, but with fears of a global slow-down it will do well to get two billion pounds for Meridien," said one fund manager with a stake in Compass.