Hotels are hot. Global investors have been buying them up like a business traveller with a company card.
Last week, US-listed Chinese hotelier Homeinns became the latest target. A consortium including management, Shanghai-listed BTG Hotels and US-listed Ctrip proposes to take the company private. The offer price, a one-fifth premium to the undisturbed price, values the company at 20 times next year’s earnings.
This might seem generous. Shares in international hoteliers trade at similar levels and appear to have a better outlook; bullishness towards the global sector comes in large part from the surge in Chinese travelling abroad rather than at home. Last year, they made over 100m trips overseas, up more than tenfold since 2000. There is room for more: relative to their population, Chinese still travel overseas far less than their neighbours, according to CLSA research.