The group has shaken off the effects of Sars and the Iraq war

The world's largest hotelier said it would use the proceeds from the sale to return �1bn to shareholders.

The announcement was made as the UK-based group reported a 27% rise in pre-tax profits to �309m for 2004.

The firm operates more than 3,500 hotels worldwide under brands such as Intercontinental, Crowne Plaza and Holiday Inn.

LRG Acquisition Ltd is made up of Lehman Brothers Real Estate Partners, GIC Real Estates and Realstar Asset Management.

Strategic move

Intercontinental previously sold off 48 hotels, mostly in the US, raising �750m.

This is a significant step forwards in the execution of our strategy Richard Solomons, finance director Check the company's share price

Hotel sell-offs tie in with Intercontinental's strategy of shifting from outright ownership to become, instead, a broadly-based hotel management and franchised hotels group.

It will continue to manage the 73 hotels it has sold in the UK.

Intercontinental Hotels was demerged from leisure group Six Continents in 2003.

Its shares rose 23% in value in 2004 and have outperformed the FTSE 100 index by almost 15% over the past year.

Commenting on the latest deal finance director Richard Solomons said: "This is a significant step forwards in the execution of our strategy and we have achieved attractive management contracts."