Hilton IPO to raise $2.4 billion by yearend

By the end of the year, iconic hotel chain Hilton Worldwide will list on the New York Stock Exchange, raising as much as $2.37 billion US.

With the accommodation and travel sector in recovery and stock prices near record levels, the McLean, Virginia-based company aims to raise cash to pay down its debts.

According to a Securities and Exchange Commission filing today, Hilton will issue 112.8 million shares for $18 to $21 each.

Biggest hotel IPO

That would value its IPO at $2.03 billion to $2.37 billion, making it the biggest hotel IPO in the world, about double the $1.09 billion raised by Hyatt Hotels in 2009.

Hilton, with more than 4,000 properties worldwide, owns 10 brands including Waldorf Astoria, DoubleTree, Embassy Suites, Homewood Suites and Hampton Inn.

The IPO would go some distance to validate the $26 billion that Blackstone Group paid for the Hilton company in 2007, just as the economy began its slide and both business and pleasure travel plunged.

At the time, the deal was seen as a poster child for leveraged-buyout excess and few believed Blackstone would get its money back. The IPO would value the company at about $20 billion.

Blackstone's plan for recovery

Blackstone brought in hotel executive Christopher J. Nassetta as chief executive to lead the turnaround at Hilton.

Over the past six years he has increased the number rooms by 34 per cent, mostly overseas and in franchised and managed hotels, as well as improving guest retention with a loyalty program. He has also stepped up the pace of developing new properties, especially in emerging markets such as Asia and South America.

The hotel sector across the U.S. has rebounded, with occupancy and room rates up and further strength expected as the economy recovers.

Hilton has about $1.25 billion in debt to pay down. Blackstone would remain as its largest shareholder, with a stake of 76.2 per cent, and said it doesnt plan to sell its shares.

In the first six months of this year, Hilton reported a profit of $189 million on revenue of $4.6billion, according to SEC filings.