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WHAT’S THE IMPLICATION OF HILTON/BLACKSTONE?

Sumner Baye is president and partner of the New York City-based International Hotel Network.

It should really come as no surprise that the bulk of respondents (79%) to last week’s Feedback Poll think the merger fruit is ripe in the hotel sector. The $26-billion buyout of Hilton by Blackstone is only one in an ongoing series of news events that underscore the change, maturity and vibrancy of the hotel market. Can anyone say Equity Inns? Commentator Baye gives us his take on the implications of the merger trend as it relates to hotels.

“This is an interesting transaction because it gives Hilton huge potential for other acquisitions. As an arm of Blackstone, they’ll have a great deal more money to deal with and a lot more possibilities. In terms of chains, there are definitely going to be other acquisitions–such as Whitehall’s acquisition of Equity Inns.

“The most interesting part of both deals is that it’s Wall Street and the investment banking community, so both deals are very exciting to the hospitality industry. Wall Street has noticed the hotel sector–something we haven’t had for a long time–and the support of Wall Street firms is very important to us. The timing is marvelous.

“Why now? I guess Wall Street has been looking at the economy and the way people are traveling these days. I’m sure they’ve looked at the various internet companies and how well they’re doing–hotels this and hotels that. They’ve looked at the huge amount of advertising and the relative improvement of the airline industry.

“It’s also a time when there’s a great deal of money available. A lot of the Blackstone money in the underwriting, from what I understood, comes from China. The weakness of the dollar against the euro makes it a good time to buy.

“I’m asked about the longevity of this trend all the time. I’m a very positive thinker so I don’t want to see it coming to an end soon. But I think we can look at the next three or four years as very solid.”

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