A top in hotel industry as economy starts declining and mega merger deal of Blackstone group acquiring Hilton is announced
Peter Oberois
Jul. 4, 2007

The travel industry in general and hotels in specific are set to slide in the next several years as the economy faces downturn from real estate collapse and mortgage defaults. Every bubble or mini-bubble ends with a mega deal. This one is no different.

Hilton Hotels Corp., the chain founded by Conrad Hilton 88 years ago, agreed to be purchased by the buyout firm, Blackstone Group LP, for about $26 billion, the biggest acquisition of a hotel company.

Blackstone will pay $47.50 for each share, the hotel chain said in a statement today. That's 32 percent more than its closing price today. Barron Hilton, Conrad's son and co-chairman of the company, will get $990 million for his 20.8 million shares.

The travel industry, especially business travel, faces severe downturn. The airlines will suffer. But the bigger problem lies with Hotels. Liquidity in the economy from mortgage refinancing and easy credit underwriting created a massive surge in business and leisure hotel room charges in the last few years.

The party is coming to an end. Interestingly, at the right moment comes this $26 billion mega merger.

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