As Paris Hilton, America’s most famous jailbird, was snapped splashing…

As Paris Hilton, America’s most famous jailbird, was snapped splashing through the surf on a Hawaiian beach her grand-daddy’s business was sol,d in a deal that promises to make Barron Hilton almost $1 billion richer, The Times reports.

The 26-year-old socialite had good reason to be smiling for the cameras, and not just because she was enjoying her first holiday since leaving prison after serving a sentence for violating probation in a drink-driving case.

Blackstone’s $20 billion bid for Hilton Hotels Corporation has not only enlarged the Hilton family fortune; it has put the whole hotel sector into play, as investors scramble to place their bets on the next company to be snapped up by a private-equity group.

But money could be pouring into the industry just as thousands more rooms are being built and demand is showing signs of tailing off.

Robert LaFleur, an analyst with the Philadelphia office of Susquehanna Financial Group, summed up the mood when he said: “Despite the run-up in asset prices over the past few years, the appreciation of hotels has fallen short of that achieved by almost any other real-estate asset class. Therefore, we believe that private equity will continue to purchase hotels until they are properly valued by the public markets.” This raises the prospect that the major hotel groups in a still-fragmented global industry will be run as finance-led operations by investment specialists with little or no direct experience in the business, a combination that has been a recipe for a string of failures in industries as diverse as engineering, films and publishing.

And the timing may be ominous. Before Blackstone Group’s cash bid for Hilton, Goldman Sachs analyst Steven Kent said it was time to sell hotel shares. He said: “We are especially concerned that supply growth is starting to surpass demand growth, which historically has been a negative signal for stock performance.”

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