Six Continents, formerly Bass, has announced plans to split its hotels from its pub and restaurant businesses.
The decision comes after Six Continents failed to find a suitable hotel group to acquire with the proceeds of its £2.3b sale of its brewing interests in 2000. It will now return £700m to shareholders.
The hotel company and the pub and restaurant company are to be listed on the UK stock market as separate entities.
Hotels, whose brand names include Holiday Inn and Inter-Continental, will be headed by chief executive Richard North, currently the group's finance director.
Chief executive of the pubs and restaurants will be Tim Clarke, currently group chief executive. Its brands include All Bar One and Harvester.
Sir Ian Prosser, the current group chairman, becomes non-executive chairman.
Six Continents said spinning off its pubs and restaurants from its hotels would allow both sides of the business to focus on their own strengths and leave them "better placed to pursue their individual strategies and drive their operational development."
It said listing the two firms separately would give investors a clearer idea of what they were putting their money into.
It would also give hotels and retail "improved ability...to develop their strong positions through participation in industry restructuring and consolidation, if appropriate.
Six Continents blamed its failure to find a suitable hotel company to acquire on the fact that, despite difficult trading conditions in the hotel industry, the prices of potential targets had remained high, meaning that any acquisitions would not have added to the group's value.