Private Equity Investors Show Renewed Interest in Hotels

9th July 2007 (Last Updated July 9th, 2007 11:49)

Hotels may be the next big target for private equity companies following the sale of Hilton Hotels to Blackstone Group last week. The largest purchase ever in the hotel industry caused other listed hotels' share prices to surge by around 7%, US newspaper the Los Angeles Times rep

Hotels may be the next big target for private equity companies following the sale of Hilton Hotels to Blackstone Group last week.

The largest purchase ever in the hotel industry caused other listed hotels’ share prices to surge by around 7%, US newspaper the Los Angeles Times reports.

Marriot International rose %#36;3.11 (7%) to $47.57 and Starwood Hotels and Resorts Worldwide rose $5.42 (7.8%) to $74.55.

Analysts believe the sale has sparked interest in hotels within the private equity markets.

CIBC world markets analyst David Katz says: “this announcement should re-spark investor’s beliefs that additional private equity buyouts are imminent.”

Deloitte & Touche partner Neale Redington says players in the industry ‘seem to be pretty bullish’ about the situation.

“I think the underlying economics of the industry have been strong and continue to be strong,” he says.

Blackstone announced it had bought the Hilton Hotels chain for $26bn in an all-cash transaction last week. The deal is subject to the approval of Hilton’s shareholders but is expected to close during the fourth quarter of 2007.