Blackstone hopes Hilton to be worth US$30b
NEW YORK: Blackstone Group LP is hoping the stock market will value Hilton Worldwide Inc at around US$30 billion (RM98.7 billion), including debt, a source familiar with the situation said, as the private equity firm filed papers on Thursday to take the United States hotel operator public.
In the initial public offering (IPO), which sources have said is expected early next year, Blackstone plans to sell a minority stake in Hilton to raise up to US$1.25 billion, according to a US Securities and Exchange Commission filing.
Blackstone, which took Hilton private in 2007 at the height of the buyout boom for US$26.7 billion, is hoping that a recovering economy, growing demand for business travel and rising room rates will allow it to command a rich valuation for Hilton.
Revenue per available room, a measure of room rates and occupancy levels, has increased about 6.9 per cent over the past three years in the Americas and demand has returned to pre-economic crisis levels, according to Smith Travel Research Inc, which tracks hotel industry data.
As a result, hotel stocks have been on a tear. The Dow Jones US Hotels index has risen 18 per cent this year. Marriott International Inc is up 15 per cent, while Starwood Hotels and Resorts is up about 20 per cent.
Marriott and Starwood trade around 12 to 13 times their earnings before interest, tax, depreciation and amortisation.
Analysts said they expect Hilton's shares to trade around the same multiples as these rivals.
"They compete very favourably with Starwood and Marriott and Hyatt, which are already there. They probably do quite well in that spectrum," said Keith Brenan, chief operating officer of Weitzman Group Inc, a real estate consultant. "Marriott is probably doing a little bit better than they are. They have a stronger rewards programme." Reuters