The takeover of Canada's Fairmont Hotels & Resorts Inc. could raise valuations of other hotel companies' stocks, as investors speculate there could be more takeovers in the sector, analysts said on Monday.

Fairmont said on Monday that Saudi Prince Alwaleed bin Talal and Colony Capital will pay $3.9 billion to buy the company -- a deal that richly values the Toronto-based chain and could do the same for its counterparts elsewhere.

"We are establishing a fairly high valuation level for future deals," said David Katz, an analyst at CIBC World Markets.

Joseph Greff, an analyst at Bear Stearns, said in a research note that the deal put Fairmont's value at 16.4 times its estimated 2006 earnings before interest, taxes, depreciation and amortization (EBITDA).

That multiple, according to Greff's note, is not only higher than his average multiple of 12 for such companies, but also exceeds valuations in other recent deals in the industry.

A strong appetite for hotels among well capitalized private equity funds is partly responsible.

Robert LaFleur, an analyst at Susquehanna Financial Group, said, "There is a significant disconnect between private market valuations and public market valuations."

"There is a lot of capital available to fund this type of privatization transactions," LaFleur said. "It's a broad-based interest in hotels in general."

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