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The famous Hilton Hotels (HLT-OLD), perhaps made more famous in recent years by heiress Paris Hilton, owns over 2,800 hotels in 80 countries. That's 485,000 hotel rooms. The hotel business has been growing as economic globalization spreads its wings deeper and deeper into the remotest parts of the world.

Over the last 3-4 years, Starwood (HOT), Marriott (MAR) and Hilton stocks have grown about 300% each - and this during a time when the travel industry, particularly airline stocks, fell from the skies.

The current outlook for hotels can be explained by the fact that while demand is strong and growing due to the increased travel across the European Union and countries like China, India and Brazil, supply is low and steady since hotel construction takes time and areas that reflect this higher demand do not always have land available to build.

So why is Hilton the one I recommend? In the third quarter of 2006, the rates that Hilton charges for its rooms were up 6% in the U.S. and 12% internationally compared with the year before. Hilton has also spent the last few years selling off some Hilton logoproperties and selling franchise licenses to diversify building and market risk. It is also finally poised to take advantage of business travel in China and India.

They recently got back together with their international sibling Hilton International, and earnings growth has been recently clocked at over 30%. The stock is close to its 52-week high despite a recent downgrade, but based on the its international growth, diversification and the fact that Hilton has plans to raise their rates by up to 10% next year, I think this is a great stock to own for the long term.

While conducting my research for this article, I also came across Wyndham (WYN), a chain that had its IPO over summer, but one that has plans to grow their capacity in China by 30% in 2 years, and one that sports cheaper earnings multiples than its competitors. For those that don't like Hilton or want to spread their risk a little, I recommend Wyndham Hotels as well.

HLT 1-yr chart:

Hilton 4 12 06

Source: Hilton's Hot and Here's Why