After a 27-year absence, global hotel company Hyatt is expected to go public late this week with an initial public offering priced between $23 and $26 per share.
With the market's unsteadiness, interested parties which likewise may be considering public offerings, including Kayak, Amadeus, Travelport and Sabre, as well as the entire lodging and travel industry, will be watching how Hyatt fares as it takes the IPO plunge.
But, this IPO would be of a different sort for Hyatt, which has seen its net income steadily fall from $315 million in 2006 to $270 million in 2007 and $168 million in 2008.
That's because, according to its latest registration statement of Oct. 30, 2009, Hyatt is expected to receive none of the roughly $900 million in proceeds from its projected sale of 38 million Shares of Class A common stock in the IPO. All of that money would go to sometimes-warring Pritzker family members, who control and will continue to control the hotel chain.
However, there is a chance that Hyatt, with its 415 Hyatt-branded properties in 45 countries, would receive some payout in the end. The underwriters have the option to purchase additional shares, and if they do so to the max, then Hyatt could end up with $124.6 million in proceeds, assuming the shares sell at the midrange price of $24.50.
In that case, Hyatt states it would use the $124.6 million "primarily for working capital and other general corporate purposes, including capital expenditures. Additionally, we may use a portion of the net proceeds for the acquisition of, or investment in, new properties or businesses that complement our business."
However, there's a big difference between $900 million and $124.6 million.
In the short term, at least, this transaction will benefit the Pritzkers, and not necessarily Hyatt's brands, guests, franchisees and employees.
Still, the travel industry will be monitoring the fate of the IPO to see how it may impact would-be imitators.
Incidentally, proceeds or not, the Hyatt stock symbol on the New York Stock Exchange would be pretty cool. The symbol would be H.