By LYNN COWAN
The IPO of Chinese hotel chain 7 Days Group Holdings Ltd. attracted investors in droves while coal miner Cloud Peak Energy Inc. drove them away during early trading Friday

7 Days Group, which operates the third-largest brand of economy hotels in China, was recently up 17% from its initial public offering price, while Cloud Peak was down 2%.

The two companies, which both listed on the New York Stock Exchange, are among the four deals expected Friday to close out November’s U.S. IPO market ahead of the Thanksgiving holidays. Two others, from online education company Archipelago Learning Inc. and defense technology specialist Global Defense Technology & Systems Inc., should open later Friday morning on the Nasdaq.

Shares of 7 Days Group are a play on China’s emerging hotel business, which has been growing rapidly along with the country’s economy and tourism in the last five years. The company has grown from five hotels in 2005 to become the third-largest economy chain in China, with 283 hotels operating under its “7 Days Inn” brand. More recently, it began licensing its brand to hotel owners, then managing the hotels for those owners, which is less capital-intensive than ownership.

For the first nine months of 2009, its revenue rose 71% to $121.7 million compared with the first nine months of 2008, primarily due to its expansion through new hotel openings. It reported a net loss due to interest expense eating away at its operating profit, but the loss narrowed by 94% to $1.5 million.

Shares of 7 Days Group opened at $13.50 on the New York Stock Exchange, up 23% from its initial public offering price of $11. It sold 10.1 million American depository shares at the high end of its expected $9 to $11 price range, which was set by underwriters J.P. Morgan Chase & Co. and Citigroup Inc.

Cloud Peak Energy, on the other hand, found its shares sinking in early trading. The stock opened at $14.50 a share on the New York Stock Exchange, down 3% from its initial public offering price of $15. It sold 30.6 million shares at a price below its expected $16-to-$18 range.

Cloud Peak, which is carving out Anglo-Australian mining giant Rio Tinto PLC’s western U.S. coal business, is the third-largest coal producer in the Powder River Basin region. The company claims to operate some of the lowest-cost, highest-producing mines in America, and its steam coal is used to produce electricity.

Demand for electricity and coal in the U.S. has been waning since mid-2008 as a result of the economic downturn. The company warns that weak market conditions during 2009 resulted in fixed price contracts for future sales at lower prices than what was seen in 2008, so Cloud Peak could see a lag effect on its results even if the economy improves. In addition, stockpiles of coal by its customers have continued to increase, leading them to curtail future orders.

Recent low prices for natural gas and oil, which are substitutes for coal generated power, may also lead to continued decreased coal consumption by electricity-generating utilities. In the first nine months of 2009, Cloud Peak has seen a greater number of customers seeking to reduce the amount of tons received under existing contracts; it warns that additional customers may also reduce tons taken in the future.

Cloud Peak didn’t begin to feel the effects of the economic downturn until the second quarter of 2009, thanks in part to long-term sales agreements with prices fixed during better economic times. In the first nine months of 2009, its properties produced revenue of $1.06 billion, up 17% from the same period of 2008, and net income of $190.1 million, up from $25.8 million.

Credit Suisse Group, Morgan Stanley and Royal Bank of Canada’s RBC Capital markets division managed Cloud Peak’s offering.

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