A little less than a year ago, Starwood announced it was spinning off its timeshare division and potentially looking to sell the rest of its business, too. That announcement was viewed as bullish to the industry, as consolidation would improve pricing power, thus April 2015 marked the high in hotel stocks.
In late October, Hyatt entered talks to buy Starwood. Then, in November, Starwood and Marriott announced they were in talks to buy Starwood for just $72 a share, a bid that was so low it shocked Cramer.
Read more from Mad Money with Jim Cramer
Cramer Remix: This could make or break Tesla
Cramer game plan: Huge payoffs from jobs report
Cramer: I'm blessing this spec play for trading
Three weeks ago, Chinese company Anbang stepped in with an unsolicited bid for $76 per share in cash. A few days later, Starwood accepted a bid from Anbang at $78, which prompted Marriott to up its bid to more than $85 per share.
"It seems that Starwood is, in reality, worth a lot more than even the people running Starwood itself thought it was. And if that is true for them, it ought to be true for the rest of the group," Cramer said.
Given what Marriott was willing to pay for Starwood, Cramer decided to figure out how to revalue the rest of the group.
Starwood is supposed to earn roughly $2.81 per share this year, which means Marriott's final bid was 30.4 times this year's earnings, or 28 times next year's estimates. With this rubric applied to the rest of hotel stocks, many came in very cheap.
Hilton Worldwide was among the cheapest at just 20 times next year's earnings, but Cramer was deterred from its debt-laden balance sheet and Blackstone's 45 percent share ownership, which could be sold.
Another cheap stock was InterContinental Hotels, at just 18.4 times next year's earnings estimates. Cramer found this company intriguing because there have been rumors that three Chinese suitors view it as a potential takeover target. Given how much Marriott was willing to pay, Cramer thinks it is possible to have a 52 percent premium for the stock.
The cheapest of all was Wyndham Worldwide, which trades at just 12 times next year's earnings.
"I wouldn't be surprised if Wyndham can work its way back to its old highs of $92 and then over $100," Cramer said.
So, in the wake of the Starwood bidding war, Cramer is ready to reassess the entire hotel group. That is why he likes InterContinental as an inexpensive consolidation play, Marriott for those ready for the long-haul and his favorite Wyndham.