Blackstone to Buy La Quinta Hotels
Private equity firm Blackstone Group said Wednesday that it agreed to acquire La Quinta Corp. for $2.28 billion, its third hotel purchase this year.
La Quinta adds a mid-priced chain to Blackstone’s roster of luxury hotels, resorts and extended-stay properties. Blackstone this year bought Wyndham International Inc. for $1.44 billion and the Rihga Royal Hotel in New York for an undisclosed amount. Last year it purchased Extended Stay America Inc. and Prime Hospitality Corp.
Blackstone will pay $11.25 a share for Dallas-based La Quinta and its publicly traded La Quinta Properties Inc. unit, the companies said. That’s 37% more than Tuesday’s closing price of $8.22. The stock closed Wednesday at $10.89, up $2.67.
New York-based Blackstone also will assume about $800 million of La Quinta debt.
Increasing business and leisure travel has led to gains in U.S. hotel occupancies and room rates, spurring acquisitions. The average occupancy rate rose 5.9% to 62.9% in the week that ended Saturday from a year earlier, according to Smith Travel Research. The daily room rate advanced 6.7% to an average of $92.81. U.S. hotel profits will rise to $20.8 billion in 2005, the highest since 2000, according to PricewaterhouseCoopers.
La Quinta owns 360 hotels and franchises more than 240 hotels in 39 U.S. states, including the La Quinta, Baymont and Woodfield Suites chains. Competitors include Fairfield Inns.
Blackstone will invest $100 million in La Quinta’s properties over three years, La Quinta Chief Executive Francis Cash said Wednesday. The buyout firm may convert some of its hotels to the La Quinta brand.
