Home Inns & Hotel Management, China's second-largest budget hotel chain, raised US$109 million in a Nasdaq share sale yesterday as American investors jumped at the chance to buy into the booming sector.
The stock opened up 59 per cent at US$22 on debut before rising to US$23.50. In the late morning trade, it soared 67 per cent to US$23.07.
Home Inns sold 7.9 million American depositary shares at US$13.80 each, higher than its published indicative price range of US$10 to US$12, thanks to greater investor demand than expected.
The sale was arranged by Credit Suisse, Merrill Lynch and Deutsche Bank, which were given a 30-day option to buy a further 1.2 million shares to cover over-allotments.
'Budget hotels are really hot right now because of the huge increase in domestic white-collar travellers,' said Lina Wong, a managing director for East China at Colliers International. 'Most of them are fully booked most of the time and we expect this trend to continue at least until 2010.'
Most investment in the hotel industry in China has been in high-end properties catering for wealthy and foreign business people but that market is already saturated.