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Based in McLean, VA, Hilton Worldwide (NYSE:HLT) scheduled a $2.2 billion IPO on the NYSE with a market capitalization of $19.2 billion at a price range midpoint of $19.50 for Thursday, December 12, 2013.

Nine operating company IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

SEC Documents

Managers: Deutsche Bank, Goldman Sachs, BofA Merrill Lynch, Morgan Stanley, J.P. Morgan, Wells Fargo Securities.

Co-Managers: Blackstone Capital Markets, Macquarie Capital, Barclays, Mitsubishi UFJ Securities, Citi, Credit Suisse, HSBC Corporation, RBS, Baird, Credit Agricole CIB, Nomura Securities, Raymond James, RBC Capital Markets, UBS Investment Bank, CastleOak Securities, Drexel Hamilton, Telsey Advisory Group, Ramirez & Co., Inc.

Summary

HLT is one of the largest and fastest growing hospitality companies in the world, with 4,080 hotels, resorts and timeshare properties comprising 671,926 rooms in 90 countries and territories.

In October 2007, HLT was acquired by affiliates of The Blackstone Group L.P. and assembled a new management team led by Christopher J. Nassetta, HLT's President and Chief Executive Officer.

43% of proceeds to Hilton Hotels Holdings LLC, the selling shareholder. Blackstone is not selling. 57% of proceeds to repay company debt.

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing June 6 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Hilton Worldwide Holdings

$19,208

2,462.5

41.5

5.0

-6.2

11%

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

Dividend

annualizing Sept 9 mos

Cap

Sls

Erngs

BkVlue

TanBV

Yield

Hilton Worldwide Holdings

$19,208

2.0

41.5

5.0

-6.2

none

Starwood (NYSE:HOT)

$14,220

2.3

21.0

4.0

9.6

1.83%

Marriott (NASDAQ:MAR)

$14,000

1.1

22.2

-9.9

-4.1

1.48%

Wyndham (NYSE:WYN)

$9,370

1.8

20.3

5.6

-9.9

1.61%

InterContinental (NYSE:IHG)

$8,070

3.2

9.9

19.8

-97.2

2.12%

Hyatt Hotels (NYSE:H)

$7,450

1.8

31.9

1.6

1.8

none

Glossary

Conclusion

Buy HLT on the IPO.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business

HLT is one of the largest and fastest growing hospitality companies in the world, with 4,080 hotels, resorts and timeshare properties comprising 671,926 rooms in 90 countries and territories.

In the nearly 100 years since its founding, HLT has defined the hospitality industry and established a portfolio of 10 world-class brands. HLT's flagship full-service Hilton Hotels & Resorts brand is the most recognized hotel brand in the world.

Its premier brand portfolio also includes HLT's luxury hotel brands, Waldorf Astoria Hotels & Resorts and Conrad Hotels & Resorts, its full-service hotel brands, DoubleTree by Hilton and Embassy Suites Hotels, its focused-service hotel brands, Hilton Garden Inn, Hampton Inn, Homewood Suites by Hilton and Home2 Suites by Hilton and its timeshare brand, Hilton Grand Vacations. HLT owns or leases interests in 156 hotels, many of which are located in global gateway cities, including iconic properties such as The Waldorf Astoria New York, the Hilton Hawaiian Village and the London Hilton on Park Lane.

More than 311,000 team members proudly serve in HLT's properties and corporate offices around the world, and HLT has 39 million members in its award-winning customer loyalty program, Hilton HHonors.

Three segments

HLT operates its business through three segments: (1) management and franchise; (2) ownership; and (3) timeshare. These complementary business segments enable HLT to capitalize on its strong brands, global market presence and significant operational scale.

Through HLT's management and franchise segment, which consists of 3,883 hotels with 603,271 rooms, it manages hotels, resorts and timeshare properties owned by third parties and HLT licenses its brands to franchisees. HLT's management and franchise segment generates high margins and long-term recurring cash flow, and has grown by 40% in terms of number of rooms since June 30, 2007, representing 98% of HLT's overall room growth, with virtually no capital investment by HLT.

HLT's ownership segment consists of 156 hotels with 62,251 rooms that HLT owns or leases. Through its timeshare segment, which consists of 41 properties comprising 6,404 units, HLT markets and sells timeshare intervals, operates timeshare resorts and a timeshare membership club and provides consumer financing.

Blackstone's acquisition

In October 2007, HLT was acquired by affiliates of The Blackstone Group L.P. and assembled a new management team led by Christopher J. Nassetta, HLT's President and Chief Executive Officer.

Under its new leadership, HLT has transformed its business, creating a globally aligned organization and establishing a performance-driven culture.

As part of its transformation, HLT focused on both top- and bottom-line operating performance, strengthening and expanding its brands and commercial services platform, and enhancing its growth rate, particularly in markets outside the U.S. where its brands historically had been underrepresented.

Competition

HLT's principal competitors include other branded and independent hotel operating companies, national and international hotel brands and ownership companies, including hotel REITs.

While local and independent brand competitors vary, on a global scale HLT's primary competitors are firms such as Accor S.A., Carlson Rezidor Group, Fairmont Raffles Hotels International, Hong Kong and Shanghai Hotels Limited, Hyatt Hotels Corporation, Intercontinental Hotel Group, Marriott International, Mövenpick Hotels and Resorts, Starwood Hotels & Resorts Worldwide and Wyndham Worldwide Corporation.

In the timeshare business, HLT competes with other hotel and resort timeshare operators for sales of timeshare intervals based principally on location, quality of accommodations, price, financing terms, quality of service, terms of property use and opportunity for timeshare owners to exchange into time at other timeshare properties or other travel rewards.

In addition, HLT competes based on brand name recognition and reputation, as well as with national and independent timeshare resale companies and owners reselling existing timeshare intervals, which could reduce demand or prices for sales of new timeshare intervals. HLT's competitors in the timeshare space include Hyatt Residence Club, Marriott Vacations Worldwide Corp., Starwood Vacation Ownership and Wyndham Vacation Resorts.

Pre-IPO 5% stockholders

Hilton Global Holdings LLC, 7.1%

Blackstone, 81.5%

HHotels Mezz Debt Private Limited, 5.4%

Use of proceeds

HLT expects to net $1.2 billion from its IPO. Proceeds are allocated as follows:

Repay $1.25 billion of term loan borrowings outstanding under HLT's senior secured credit facilities. As of November 8, 2013, HLT had $7.5 billion of term loan borrowings outstanding under its senior secured credit facilities which will mature on October 25, 2020.

Disclaimer: This HLT IPO report is based on a reading and analysis of HLT's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Hilton Worldwide