The value of mergers and acquisitions in the hotel industry more than doubled to $4.1 billion in the first half, according to Coopers & Lybrand LLP.
"There's a lot of public capital available in the industry," said Arthur Adler, a partner in Coopers & Lybrand's lodging and gaming group. "Given the multiples at which the hotel companies are trading, they need and want to grow."
Mr. Adler added that the consolidation "makes good business sense" when companies can combine the costs of overhead and accounting. It also allows hotels to leverage their marketing dollars better, by spreading the marketing over more property, he said.
Among the six hotel acquisitions in the first half, the largest were Parsippany, N.J.-based HFS Inc.'s $1.8 billion deal to buy PHH Corp., of Hunt Valley, Md., and Marriott International's $1 billion purchase of 150 hotels from Renaissance Hotels.
During the first six months of 1996, there were nine acquisitions.
Small to midsize companies are also pairing up to serve customers wherever they travel. In May Los Angeles-based Signature Resorts Group Inc. expanded into the Southeast with its $59.1 million purchase of time-share developer Plantation Resorts Group, of Williamsburg, Va.
Increased attention from both commercial and investment banks has played a part in fostering the hotel industry's growth. "There is a lot of capital both on the equity and debt sides, and a lot of the commercial banks are active," Mr. Adler said.
Despite all the deals, new hotel construction is still going on.
Although the new development is concentrated in hotels that are mid- priced with limited-service and extended stays like Hilton Garden Inn and Amerisuites, Mr. Adler said, "We're in a virtual building boom." Both types of hotels require smaller building sites and less capital, he said.