Blackstone May Make It 3 for 3 with Hotel IPOs

NEW YORK CITY-Having scored a success with its Nov. 12 IPO for Extended Stay America, the Blackstone Group reportedly now is seeking to increase the size of its stock offering for Hilton Worldwide Holdings Inc. to $2.25 billion. Most recently, published reports say the private equity giant will seek to file for an IPO on La Quinta Inns & Suites rather than sell the limited-service hotel operator via auction on the private market. A Blackstone spokesman tells GlobeSt.com the company cannot comment on the reports due to SEC regulations.

Currently valued at $4.5 billion, La Quinta would represent Blackstone's third lodging IPO. “It's an advantageous point in the hotel cycle,” Drew Babin, senior lodging analyst at CBRE Clarion Securities, told Bloomberg Monday.  With supply growth proceeding slowly, “we expect three more years” of above-average gains in rates and occupancy, Babin said.

The growth in lodging metrics is also reflected in the sector's performance in the public markets. Bloomberg reported that shares of Marriott International Inc., currently the largest publicly traded chain, have gained 35% over the past 12 month, while Starwood Hotels & Resorts Worldwide Inc. grew 41% and Wyndham Worldwide Corp. 43%. All three have outperformed the S&P 500, which gained 30% this year to reach a new record.

Citing unnamed sources, Bloomberg and Reuters reported on Monday that Blackstone was betting that it could get higher returns from a La Quinta IPO than via a sale. It had already begun accepting bids in a sales process that began last month.

Blackstone paid approximately $3.4 billion to take La Quinta private in January 2006.  La Quinta today operates and provides franchise services to more than 800 hotels totaling more than 80,000 keys across North America, including more than 550 in the US alone, making it one of the largest operators in its asset class.