PricewaterhouseCoopers forecasts a dramatic increase in IPO activity within the U.S lodging industry for 2004.
The firm estimates that four to seven IPOs, among them several REITs, will occur this year. If this happens, it will make 2004 the biggest year for lodging IPOs since 1996, when 12 public offerings occurred.
Merger & Acquisition (M&A) activity also are expected to be strong this year. PricewaterhouseCoopers believes that 2004 will return to 1999 levels, when 11 major transactions took place. The peak occurred in 1998, when there were a total of 25 transactions.
"Companies have been deferring transactions awaiting more receptive equity markets, and the equity markets, and the equity markets and institutional investors have been awaiting signs of accelerating industry performance," says Bjorn Hanson, global leader of PricewaterhouseCooper’s hospitality and leisure practice."All of the requirements for IPOs, secondary offerings and M&A activity are emerging."
What will support this IPO equity and M&A activity? PricewaterhouseCoopers points to favorable EBITDA multiples for lodging companies that should allow many of them to raise public equity. Also, industry analysts expect that the industry will see rising profits in 2004 and 2005.