NEW YORK— If it appears the hotel arena of late has morphed into a veritable three-ring circus of public offerings, mergers and acquisitions, there’s good reason for such activity, according to findings reported— and more recently, reconfirmed— by PricewaterhouseCoopers. In the realm of initial public offerings (IPOs), PwC is sticking to its forecast earlier this year that such transactions would be on pace to raise more than $1 billion in equity in 2004. Certainly, events of the past months (since the company’s March 2004 advisory was released) have done little to suggest this mark won’t be attained… or more likely, surpassed. For instance, it was noted CNL Hospitality filed for a $750-million offering in May, while the following month, Strategic Hotel Capital similarly filed for an IPO of 17.6 million shares of common stock. It was further contended these two undertakings alone promise to position the current year as one encompassing the highest level of such activity since 1997 (when $551 million was said to have been raised). As for secondary offerings, PwC pointed out the organization had previously forecast more than 10 such public equity offerings in 2004. On this score, it was noted that— as of mid-July— 10 secondary offerings were already completed, raising in excess of $801 million in the process. What’s more, the industry-advisory firm reported one more offering has already been filed with the Securities & Exchange Commission (SEC) in early June by Host Marriott. All told, PwC estimates total public equity raised for 2004 will be the greatest since 1997, when there were 29 offerings that raised some $3.7 billion. Commenting on the heated state of the current marketplace, PwC Hospitality & Leisure Practice Global Leader Bjorn Hanson explained: “The more receptive equity markets are attracting companies that deferred offerings for the last four years,” As such, he added: “The continued positive year-over-year occupancy and average daily rate increases will continue to support lodging interest in the public equity markets.” Turning finally to the mergers and acquisitions playing field, PwC found that— as of mid-July— six mergers or acquisitions took place in the lodging sector (equaling the firm’s estimates of March). As a result, PwC said it now expects a total of 10 such major transactions by the end of the year.
Bjorn Hanson