Shares of hotel operators surged yesterday in the wake of Blackstone Group's deal to buy Beverly Hills, Calif.-based Hilton Hotels Corp. for $26 billion, fueling speculation that other lodging companies might be the next target for private equity investors.

The proposed purchase is the largest to date in the hotel industry and would make Blackstone the largest hotel operator in the world with more than 583,000 rooms. Hilton operates the Hilton Hawaiian Village and other resorts in Hawai'i.

The deal, which took many by surprise, is a "huge endorsement of the hotel industry," said consultant Alan Reay at Irvine, Calif.-based Atlas Hospitality Group, noting that the $47.50-a-share offer, announced Tuesday, was a 40 percent premium over Hilton's stock price Monday.

"I think everyone is in play now as a potential acquisition target," Reay said. "Travel and tourism is going to be one of the biggest industries in the next five to 10 years."

Most of the major hotel chains saw their shares rise more than they have in months, if not years. Marriott International rose $3.11, or 7 percent, to $47.57; Starwood Hotels & Resorts Worldwide Inc., operator of Sheraton, Westin and W hotels, climbed $5.42, or 7.8 percent, to $74.55.

Hilton, the second-largest U.S. hotelier, was one of the most heavily traded stocks on Wall Street, with its shares rising $9.34, or 26 percent, to $45.39.

Analysts weighing in after the offer was announced said they expected other lodging stocks to rise.

"Hilton Hotels being acquired by Blackstone Group, no end in sight?" asked CIBC World Markets analyst David Katz in a research note. "This announcement should re-spark investors' beliefs that additional private equity buyouts are imminent."

Several suggested that Starwood will be the next company taken private. JPMorgan analyst Harry Curtis noted that like Hilton, Starwood owns and manages assets, including time shares and international properties.

"I think the underlying economics of the industry have been strong and continue to be strong," said Neale Redington, partner in charge of hospitality for Deloitte & Touche.

"Everybody seems to be pretty bullish about where we are," he said, likening the momentum to the second or third inning of a baseball game.

Last year, California set a record for the number of hotel sales and the dollar amount. And the prices keep rising, Reay of Atlas Hospitality said.

In 2006, hotel real estate investment worldwide was $72.5 billion, 63 percent higher than in 2005, according to a report by lodging investment company Jones Lang LaSalle Hotels.

Analysts aren't expecting a competing bid for Hilton, given the premium offer.

Under the terms of the deal released yesterday, Hilton would have to pay Blackstone $560 million to pull out of the deal. If Blackstone wants out, it would have to pay Hilton $660 million.

Blackstone, already a major owner of commercial real estate, has said it views Hilton as an important strategic investment and doesn't plan on significant divestitures. In April, however, it agreed to sell its Extended Stay hotel chain for $8 billion, three years after buying the business.

The Hilton deal is expected to close by the end of the fourth quarter.

Hilton Hotels was founded in 1919 by Conrad Hilton with one hotel in Cisco, Texas. The company is now the world's fourth-largest hotelier with 2,800 hotels in 76 countries. Its brands include Hilton, Conrad Hotels, Doubletree, Hampton Inns and Waldorf-Astoria.

Blackstone Group is one of the leading names in the corporate buyout business.