(Reuters) - Hilton Worldwide Inc said its initial public offering would raise up to $2.37 billion in the biggest-ever hotel IPO, more than doubling Blackstone Group LP's (>> The Blackstone Group L.P.) investment.

Hilton is expected to launch its initial public offering this month and the sale of about 11.5 percent of its shares would value the company at up to $32.5 billion, including debt.

Blackstone took Hilton private in 2007 for $26.7 billion, including debt, in one of the largest leveraged buyouts before the 2008 global financial crisis.

Blackstone has invested in total about $6.4 billion in Hilton and its 76.2 percent stake after the IPO would be worth up to $15.7 billion.

Its private equity and real estate funds, which provided the equity for the leveraged buyout in 2007, are not selling any shares in the IPO. A Blackstone debt fund has registered to sell Hilton shares in the IPO equivalent to a roughly 0.5 percent stake, according to a regulatory filing.

"The Blackstone Group has timed the Hilton IPO at the perfect market inflection points of increasing global consumer travel demand, daily room rates, and occupancy," said Christopher Muller, a professor at Boston University's School of Hospitality Administration.

The U.S. hotel industry has been recovering with room rates and occupancy levels expected to increase in 2014, according to PricewaterhouseCoopers. The Dow Jones U.S. Hotels index <.DJUSLG> has risen 30 percent so far this year.

Hilton's IPO will be the second-biggest IPO in 2013, behind oil pipeline holding company Plains GP Holdings LP (>> Plains GP Holdings LP), which raised $2.82 billion.

It will also be bigger than Twitter Inc (>> Twitter Inc), which raised $1.82 billion.

Blackstone's plans for an IPO of Hilton come as private equity firms sell or list assets to take advantage of a surging IPO market that has been spurred by a market rally and low interest rates that have encouraged investors to buy stocks.

Hyatt Hotels Corp (>> Hyatt Hotels Corporation) raised about $950 million in 2009 in the biggest hotel IPO to date.

Another Blackstone-backed hotel company, Extended Stay America Inc (>> Extended Stay America Inc), raised about $565 million last month.

Blackstone also plans an IPO of hotel chain La Quinta, sources told Reuters last week.

The investment firm also listed Brixmor Property Group Inc (>> Brixmor Property Group Inc) earlier this year.

STRONG INVESTOR APPETITE

Hilton expects to price the offering of 112.8 million shares at between $18 and $21 per share, giving the company an equity value of $20.7 billion, according to a filing with the U.S. Securities and Exchange Commission on Monday. (http://link.reuters.com/xec25v)

Hilton is selling 64.1 million shares in the offering, raising about $1.3 billion at the top end of the price range. Shareholders will offer the remaining 48.7 million shares.

The IPO could raise $2.72 billion if underwriters exercise their rights to buy another 16.9 million shares.

The company said it would use the proceeds from the offering to repay $1.25 billion of its total debt of $11.8 billion as of September 30.

Founded in 1919 by Conrad Hilton, Hilton's brands include such high-end names as Conrad and Waldorf Astoria.

Hilton, which operates in 90 countries, has 4,041 hotels, or 665,667 rooms, under its umbrella.

The company itself owns or leases 157 hotels, including the Waldorf Astoria in New York and the Hilton Hawaiian Village.

"Investor appetite is expected to be strong for the IPO as Hilton is a pre-eminent name in the field," said David Menlow, president of IPOFinancial.com.

Hilton will list on the New York Stock Exchange under the symbol "HLT".

Lead underwriters for the offering are Deutsche Bank, Goldman Sachs Group Inc, Bank of America Corp and Morgan Stanley.

The company said on Monday that J.P. Morgan, Wells Fargo Securities and 18 others would also underwrite the IPO.

(Additional reporting by Greg Roumeliotis in New York; Editing by Saumyadeb Chakrabarty, Ted Kerr, Savio D'Souza and Phil Berlowitz)

By Tanya Agrawal